Want to Be a Real Estate Mogul? 3816 S. Emerald in Bridgeport
We often chatter about buying properties as “investments” and look mainly at rehabbed or new construction 1 or 2-bedroom condos.
But maybe investors should start with a property like this 2-flat at 3816 S. Emerald in Bridgeport.
Built in 1888, the property has 4 bedrooms, 2 baths and 2 parking spaces.
Can an investor make this property work financially?
Kathy Repsis at Coldwell Banker has the listing. See the listing and more pictures here.
3816 S. Emerald: 4 bedrooms, 2 baths, 2-flat
- I couldn’t find an original sales price
- Originally listed in May 2008 for $314,900
- Reduced several times
- Currently listed for $259,900
- Taxes of $3899
- Stoves and refrigerators stay
Egads, what a dump. Wouldn’t take it as a gift.
Gee, thanks for the stoves and the refrigerators!! I think you could get $900 per unit in Bridgeport for these places. Going much further south however, and you start to enter no man’s land. (IMHO)
if you have 20% for a down payment you could make it work if you section 8 both properties.
Sabrina, now your readers know the housing conditions for working-class families in Chicago neighborhoods. A decade ago I looked at many multi-family buildings in Edgewater with the goal of becoming a landlord. The condition of even Edgewater’s rental housing stock was depressingly bad. This unit isn’t even that bad in this context.
Bridgeport is going to be one of the areas that gets hit bad in this downturn. Theres no way to justify $200-250/sf which is what many of the condos sold for during the bubble.
For a good laugh check the new condos on the MLS: some developers think they can get 230-250k for 750sf 1/1’s. Yeah..no thanks.
Interesting on several levels:
1) The investment numbers aren’t that great on this one. Much better deals than this out there (like one I have for sale…sorry…couldn’t resist).
2) The reason there are much better returns available right now is that no one is buying – they can’t get financing unless they have outstanding financial resources – and there are short sales available with great returns. If you want to be a 2 – 4 flat mogul you can cash flow properties now.
3) Ditto on abc’s comments. This city is incredibly unaffordable even after the price declines and even with the relative bargain of rentals vs. buying. This is where regular people live.
Oh…and of course interest rates are down.
Thanks, Sabrina, for bringing this up. I’d love to see more examples like this in other neighborhoods posted for discussion. There’s a brick three flat in the northern part of Edgewater for around 499K (last time I checked), and that’s about as cheap as it gets per unit around there from what I’ve seen. I don’t know how anyone can make money as a landlord with prices still so high. I’m going to check out Gary’s blog and try to find whatever bargain priced property he’s talking about. Gary, if you can share some examples of multi-unit properties on the north side that are a good deal, I’d love to hear about them.
My sister and I have been looking for a 4-6 flat that would cash flow well that we could also afford. Anytime I crunch the numbers, if the cost per unit is more than about $110k, it is really hard to get it to work, unless you can also get >$1000/month in rents, or you can keep 100% occupancy 100% of the time. Ideally if a unit were empty for one month between tenants, for painting, repairs, updates, and so on, the other rents should be good enough to still cover the mortgage.
I’d be embarassed to ask for even $900/month rent here. And bite your tongue about Section 8.
It’s basically too dumpy, in too dumpy of a location, to be listed at that price.
I moved to Chicago just over two years ago and I was a FOOL to buy–not because I bought before the overall market collapse, but because rent in this town is dirt cheap compared to the cost of owning a place. I see 2 bed, 2 bath places and 3 bed 1 bath places in Andersonville for $1500 a month or less all the time. I have friends who rent a 2 bed/2 bath in the heart of Lakeview East for under $1300 a month. (Yes, the kitchens and baths are ugly, but the location is amazing and they’re paying at least half what their mortgage on a similar place would be.) Before I buy anything (to live in or rent out as an investment), prices still need to go WAY down. The only way to make money as a landlord here is to be a slumlord. The home prices in the ghetto are 75% less than areas like Edgewater and Lincoln Square, but the rents in the hood are only 20 to 40% less.
Danny,
The property I’m talking about is 727 N. Noble – a 2 flat with monthly rent of $2977 with a list of $460K. It’s a short sale so the bank will take something less but even at list it cash flows. I swear I’m not trying to sell property on Cribchatter but this is a good example of how these buildings finally make sense. It’s not in my blog but on my site here: http://lucidrealty.com/06888541.ad
I’ll look around for similar properties further north.
Danny,
Here’s one that might be interesting, though I’m not personally familiar with it. I’m not saying that you’d want to live there but it has a bit less than a 6.9% cap rate at list price if in fact it’s rented out. But it’s a short sale so it will go for less. Looks like it’s already under contract so it will be interesting to see what it goes for.
http://lucidrealty.com/06888541.ad
Of course, most rental property is overpriced as you and others have pointed out. I see them with 2 – 4% cap rates all the time. No one buys these in their right mind. I also can tell you interesting stories of landlords that thought they were a mogul sitting on $3MM of rental properties and ended up homeless. I’m not exaggerating.
That link just takes me to the place on Noble. Did you pasted in the wrong URL?
As much as I love to talk about how much smarter renting is in Chicago, I really hate not being able to rehab and customize my own place. So, while I’m convinced renting is best for now, I am rooting for prices to come down more on single family homes and multi-units so I can enjoy working on a fixer upper without feeling like it’s an awful investment.
Danny,
Sorry. Try this link: http://lucidrealty.com/popup/listing_detail/detail.htm?scope=ALL&id=32542435
Yeah, I hear you about prices coming down. It’s the desire to do that customization that drives people to buy ultimately. I think the bargains are out there. You just have to keep your eyes open for them.
Thanks, that’s a good find. I hope more places like this with 2 bed units at around 100K each start showing up.
The property that Gary just mentioned is under contract, and I think, jusding from the tax records that the apts. are really small.
I’ve been looking at Northside income properties for a few months now and most need work.
The best deals are in West Ridge. Decent rents, big apartments, far lower prices than trendier nabes.
Is West Ridge really that much safer than East Rogers Park? That area is a public transit desert and I haven’t been very impressed with its safety the few times I’ve checked the recent crime records online. I guess the multi-unit buildings in West Ridge are cheaper than those around Loyola, but at least that area has the red line.
BTW, I should mention another factor that will eventually bring rationality to the income property market. An incredible number of these buildings aren’t rented out, yet the seller is trying to get top dollar for them. Well, if they’re so great, why aren’t they rented? So the banks have finally gotten smart. More and more of them want to see one year leases in place. They’re also asking for larger down payments – up to 40% if you aren’t living in the building. This is drying up demand. It’s only a matter of time…
Multiply rent by 120 to get a good estimate of the price of a rental investment. That’s a good observation when somebody above said they hope more buildings come available with $100k units because that’s about $850 rent. Comparable units in my building and area sold for and are still listed at 200x rent to 250x rent. Good luck with that.
Price cut to 219,900.
Sold in 7/2009 for 195k.