Want To Be A Landlord In The Gold Coast? A 2-Bedroom At 20 E. Goethe
This 2-bedroom in 20 E. Goethe in the Gold Coast recently came on the market.
It is bank owned and is a Homepath property which means it can be purchased for just 3% down.
The listing also says it is being sold as “tenant occupied.”
I couldn’t find the recent rental listing but here is the listing from 2011. The unit was originally listed for $1700 a month and ended up renting for $1300 a month.
See the rental listing here.
It has 10 foot ceilings, a wood burning fireplace and crown molding.
The kitchen has cherry cabinets, granite counter tops and what looks to be white appliances.
It doesn’t have central air, washer/dryer in the unit or parking.
With the HOAs at $751 a month, does this even make any sense as an investment?
Coya Smith at Smith Partners & Associates has the listing. See the pictures here.
Unit #501: 2 bedrooms, 1 bath, no square footage listed
- Sold in September 1996 for $91,000
- Sold in June 2000 for $160,000
- Lis pendens foreclosure filed in December 2010
- Bank owned in March 2012
- Currently listed as a Homepath property at $169,900
- Being sold as tenant occupied
- Assessments of $751 a month
- Taxes of $3006
- No central air
- No washer/dryer in the unit
- No parking
- Bedroom #1: 15×15
- Bedroom #2: 12×10
5 With fixed costs (HOA plus taxes) of $1050 a month subtracted from a rental price of $1300, you have only $300 a month to make your mortgage payment, which makes this place overpriced at $169K. While $1300 a month seems like an awfully low rent for a 4 room apt in this prime location, the fact is that no one wanted to pay more, or they’d BE paying more, so I’ll just work with that.
Lessee….. A 30 year fixed with the most favorable interest rate available, 3.75%, and 20% down, plus $1000 a year for insurance (minimum- it probably would cost more) works out to a mortgage payment of $709 a month according to the mortgage calculator widget on my home page. Well, so I’ll put 40% down, that makes the payments $552. Still too much and anyway, why would I put 40% down on this high-maintenance dump when I could pay cash for a number of Rogers Park rehabs where the tenant pays the utilities and the maintenance is $200 a month, and that are ready to rent without so much as painting the place, for about the same money it would take to make 40% on this little dump. Friend of mine just paid $75K cash for a beautiful RP rehab with 2 beds 2 baths that has $2100 a year taxes (too much, IMO, but STILL), new everything, that would easily rent for $1100. I could put 20% down on something like that, have a place I wouldn’t have to do a thing to, and have a total monthly nut (mortgage + taxes+ ins.+ HOA) of around $800 a month, with far fewer special assessments to dread.
The only person for whom this is a deal is someone who really, really wants to live in this location and even then the price is too high relative to the rent the place fetches.
I wonder how this ended up as bank owned with a previous sales date of 2000.
At any rate, I don’t see how owning a condo in a random building and then renting it out makes financial sense. Buying a 2 or 3-flat makes a lot more sense for a first time landlord.
Gee, I just can’t for the life of me figure out how this ended up being REO, har har.
My offhand guess is that the previous owner, back around 2004 or thereabouts, decided to extract the “sleeping” equity and “put it to work”- no doubt on such wonderful investments as vacations abroad, Coach handbags, boob jobs, and such, because it surely wasn’t spent improving this place. Or at least not very much.
Or, the previous owner was somebody on an income of $40K a year, with many other bills for credit cards or a car, who bought the place with no money down with a 0 interest loan or or pay option ARM, with very minimal payments for the first 2 years, who could not withstand the payment shock after the 2-year introductory period, and when the payments, like, TRIPLED when all that deferred interest and principle came due in the form of a huge bubble payment, the owner, having hoped to refinance on the assurance that the place would be worth more, buckled.
Most of the millions of foreclosures we’ve seen are due to one or both of the above circumstances. The second is more common, and is most likely the case if this place does not have a history of refinances. If there is a string of refi’s, then HELOC abuse was the cause.
Agree with you that owning condos as cash-flow rentals makes no financial sense, but in many nabes, like Rogers Park, there is such huge supply of rehabs and they are dropping so low in price, that for these units, it actually makes sense. But this is an anomalous situation and I don’t expect it to be repeated once we have recovered from the Great Rampage.
If indeed we ever do recover. This disaster just seems to keep rolling, due mostly to inept government interventions, which is why we are now looking at an FHA bailout in not very long. We’re about to get ANOTHER wave of defaults from all the FHA mortgages written 2009-present, for people with FICO scores as low as 580, for loans 4X DTI. Guess what, the FHA offers ARM loans, if you can believe. I know,because I was offered one. The current FHA default/delinquency rate is 17%, which is one very toxic loan pool. Worse, FHA writes loans up to $500K, and higher in high-priced markets like CA, so this will be another very expensive bailout.
I’ve actually seen a unit in this building. AWEFUL. Nice neighborhood but horrible building.
I own a low-rise, low-HOA condo in Lincoln Park where the “numbers make sense” (and dollars:) but usually that’s not the case with condos. Buying a 6 flat building in Near West or Far North or something would be a better bet for rental… but then again you have do DO EVERYTHING to keep it clean and nice. I love my little 1 Bd and it brings in $1400-$1500/mth… covers mortgage, HOA, and leaves a little left over. Again this was hard to find but it can be done.
Condos can cash flow. They generally demand higher rents than a random 3 flat and also usually have Longer term renters. The assessments are tax deductible and of course cover current maint and reserves. Not all Condos are bad investments it just depends on the acquisition cost, assessments and income. As an investor I was never a fan but am starting to change my tune on what some are going for.
It looks like an awful unit- small, cramped, and ugly. It’s really a stretch to call it a 2 bed. Both bedrooms are so small that the beds barely fit, and the 2nd really shouldn’t even count as a bedroom, but as a closet. The kitchen and bath are small and strangely configured, with barely enough room to open the fridge door or turn around.
It ought to be gutted and turned into a one bed. The walls look awful and trim and doors are hideous.
One special assessment in any large condo building can destroy years of profit.
“I don’t see how owning a condo in a random building…”
Rent this out on craigslist for $120 a night, maybe even $150…and you can make $2000 per month. HD: is that legal? I don’t see why not, we’re not totally overregulated yet, are we?
Yes it’s legal but you need to be regulated and the board has to approve.
No way no how would a decent condo association permit a unit to be used as a transient one-night rental. I would raise every kind of hell if this were happening in my rental building, and I’d never want to own in a building that let units be let on those terms. Security is the big issue- how can your building be secure when someone is admitting a different stranger every night? How could this be regulated properly?
The bedrooms are 15×15 and 12×10 perfectly acceptable 2 Bed unit. Why would your turn it into a one bedroom??? Would not recommend doing that
I would not be happy if my neighbors started renting out their units like they were hotel rooms. That being said, this particular unit does seem reminiscent of a flop house. I wonder what it would take for a large investor to buy up all the units and rehab the building so that each unit takes up the entire floor.
here’s an ad for a condo building:
LUXURY BUILDING – Furnished 1-Bedroom with outdoor terrace.
Bedroom has double bed and there is a memory foam sofa in living room. There is also an air mattress available. Full Kitchen & 42 inch flat screen TV with Cable. 2.5 blocks from Michigan Ave.
AVAILABLE
November 21st, 2012-November 25th, 2012. (3 day minimum) $139 per Night
December 15th, 2012-January 5th, 2013. (10 day minimum) $139 per Night
Seriously Inquiries Only.
Check in – Noon
Check out – 10 am
Shoreham Building- 400 E. South Water.
Lakeshore East Area
That’s from craigslist, I couldn’t get the link to post…
The shoreham is a rental building.
“Laura Louzader (November 23, 2012, 5:45 pm)
It ought to be gutted and turned into a one bed. The walls look awful and trim and doors are hideous.”
It probably WAS a 1 bedroom that was turned into a 2 bedroom.
I’m trying to figure out which of the two bedrooms pictured could possibly be 15′ x15″. Pictures 5 and 6 both look to be much narrower rooms.
get the gov to cut taxes by 40% , then lets talk
Run that by me again. Does it rent by the month, or the week? Reminds me a little of the Blues Brothers’ apartment, without the El tracks. And that’s not meant to be a kind reference.
Landlord – no. Trust-fund hipster? Yes.
Dan#2. at one pt we figured out the blues bro apt was on van buran and state where that little park is now. the one that had the giant eyeball in it a couple summers ago. pretty sure tfo found the info here http://www.chicago-l.org/multimedia/blues/index.htmlhttp://www.chicago-l.org/multimedia/blues/index.html
elwood’s sro had a pretty nice social room lobby iirc. lots of space to hang out with fellow tenants.
Looks very scary in the inside. Sorry not sunglight, tight walls, a trapped feeling.
For those with a good real estate eye–I am trying to decide between considering a buy at 227 E. Walton–a two bedroom for $284,000 and $660 per month HOA dues. Or, my alternative thought was to buy a one bedroom at Chicago Place, 100 E. Huron, with listing price of $350,000. The HOA dues there would probably be between $500 and $550. The Walton building does not have a doorman, or workout facility. Also, it has been named a landmark building. However, it does have more space than the Huron building, which is newer and closer to Michigan Avenue. What do you think?
To CH:
“Got my Cheez Whiz, boy?”
nice