When the Whole Building is Bank Owned: 2430 W. Iowa in West Town
2430 W. Iowa in West Town is a 3-unit building built in 2005.
Each of the units had all the new construction bells and whistles of that era- including cherry kitchen cabinets and granite counter tops along with wood floors.
All 3 units sold in 2005 and early 2006 and now all 3 have been taken back by the bank.
2 of the units are already pending but Unit #2 just recently came on the market.
The appliances are missing on Unit #2 but the rest of the kitchen appears to be intact.
There are no assessments listed with any of the units in the building- so there may not be any association.
Here are the details on the other two units:
Unit #1: 2 bedrooms, 2 baths, 2500 square feet
- Sold in 2006- can’t find an original sales price in the public records
- Lis pendens in June 2008
- Bank owned in June 2010
- Currently listed for $129,900
- Under contract
Unit #3: 2 bedrooms, 2 baths
- Sold in November 2005 for $340,000
- Lis pendens in February 2009
- Bank owned in April 2010
- Currently listed for $164,500
- Under contract
Given the history of the building, is Unit #2 a deal at its current price?
Ayoub Rabah at Great Street Properties has the listing. See the pictures here.
Unit #2: 2 bedrooms, 2 baths, parking included
- Sold in January 2006 for $327,000
- Lis pendens in January 2008
- Bank owned in September 2008
- Originally listed in April 2010
- Currently listed for $149,900
- No Assessments listed
- Taxes of $4819
- Central Air
- Bedroom #1: 14×14
- Bedroom #2: 10×9
- Living room: 17×13
- Kitchen: 13×10
Steal.
unit 1 is likely a duplex down
unit 2 is likely 1150 sqft
and all these were likely priced to start bidding wars. I tell you what I wouldnt want to live at western and Iowa… no thanks!
How did they manage to build new, with the standard 3-flat design, and have the units all be basically 1+dens?
“unit 1 is likely a duplex down”
redfin listing doesn’t show any evidence of that.
I toured Unit 3 a few months back and was reasonably impressed, and the ask was like ~$240k at that time. It was a little worse for the wear, but nothing really more than simple cosmetic problems. Nice vaulted ceiling. The area doesn’t do it for me though.
IIRC, the second bedroom was well sized.
“IIRC, the second bedroom was well sized.”
The listing sez 10×10, which is okay, but smallish for a 2 BR in this sort of building.
Of course, your recollection is likely more accurate than the listing.
“Of course, your recollection is likely more accurate than the listing.”
Photo 6 for Unit 3 shows about a third of the second bedroom. Looks pretty close to 10′ or so. Maybe “well sized” was a bit generous, but 10×10 for a second bedroom isn’t ideal, but good enough (for my purposes).
Listing says “Currently no HOA.” what does that mean for a buyer? I guess one should be prepared to roll up his/her sleeves and get involved in the management of the property?
“10×10 for a second bedroom isn’t ideal, but good enough (for my purposes).”
Sure, and the price is definitely right, now. But I still question the decision at the point of construction–who thought it was a good idea? It’s a combo LR, with an open kitchen and 1.75 BRs–seems to really under-utilize the lot size.
“Listing says “Currently no HOA.” what does that mean for a buyer?”
It means you better come with cash as no bank will provide a loan for this ….. not even sure they will with a large downpayment.
“Sure, and the price is definitely right, now. But I still question the decision at the point of construction–who thought it was a good idea? It’s a combo LR, with an open kitchen and 1.75 BRs–seems to really under-utilize the lot size.”
The building doesn’t go very far back and really doesn’t seem particularly wide.
“The building doesn’t go very far back and really doesn’t seem particularly wide.”
Yeah, I realize that more wouldn’t fit in what they built, but the RF listing says the lot is 125 deep, so I don’t understand *why* they built it so short.
“It means you better come with cash as no bank will provide a loan for this ….. not even sure they will with a large downpayment.”
If this statement is true it scares the hell out of me for the future of the RE market.
Step back and think about it for a second: 3 units at 150k apiece without financing. What would they sell for to bozos who can get loans on them if they could? 250-325k?
This is what scares the hell out of me–the differential between all cash deals and turnkey, finance-able, units. Is it really this easy to make money as an all cash investor? I can’t believe the differential would be this big.
“Step back and think about it for a second: 3 units at 150k apiece without financing. What would they sell for to bozos who can get loans on them if they could? 250-325k?”
If they really were bozos, maybe $250k, less necessary repairs, appliances, etc.
The stumbling block is the lack of HOA, which could be remedied with cooperation among the banks currently owning each unit–but you know how unlikely that is. bc of this, the banks prob have them filed under “problem properties” and just want to dump them.
The listing for #3 claimed homepath financing available, so it’s probably not completely unfinanceable.
If two units are under contract, then financing should be available. Since it is new construction, the HOA doesn’t necessarily have to be in place.
Russ: Quick financing question. Would I be an idiot to buy a place using a 5/yr arm right now? (It would be in connection with a 10% down jumbo; I don’t have 20% for a fixed jumbo.) I may sell the place within 5 years, but only if we have a second kid. Thx.
Annony;
It really depends on your risk tolerance and where you are in your life. Personally, I would be leery about buying if you only have a five year time horizon. If you do buy, I would make sure it is a place you can live in longer than five years if needed. Rates are really low along with prices, so there may not be a better time to buy. However, I wouldn’t go in with the expectation that you are going to make a ton of money on the place.
With ARMs you are getting a lower rate today, for the potential of a higher rate in the future. A lot of the available jumbo financing are ARMs as lenders really don’t like 30 year fixed rate loans, so most non-fannie/freddie lenders push ARMs.
No one knows what the market will be in five years. I would just see what the max adjustment could be in year five and determine if you think you could handle it if you had to be in the property at that time. I would also make sure you put in place a plan to aggressively pay the mortgage down over the next five years in case you need to refinance to ensure you aren’t stuck if the LTV is too high given how guidelines could be five years from now.
Thanks Russ.
“This is what scares the hell out of me–the differential between all cash deals and turnkey, finance-able, units.”
Really? — because it leaves me with a warm fuzzy feeling inside!!
It’s not a big deal to buy w/o an HOA. All new construction of this size will not have an HOA, and those places get financed all day long. I did it for my own place so I have actual experience in this area.
Also, with a 3-flat, you are going to be managing the HOA yourself anyway. There is not enough cash to pay an outside management company. Nor do you need to. Nor is that a good use of your money. (I run my 6-unit building’s HOA with 2 other owners on the condo board.)
My previous post might have sounded like you should live in a building w/o an HOA. That is not the case. Just buying w/o an HOA is okay in this situation. You would want to set-up the HOA after a majority of units are sold.
Question: is buying into a building with no HOA, and then proceeding to set up an HOA with other owners/investors, a common “flipping” strategy?
We went to go check out a foreclosure in a 3-unit, and the listing agent started giving us the whole flippers spiel, saying that if we bought into the building, and set up an HOA with the other units’ investors, we could then flip the unit for a gazillion times return. We quickly backed out of the showing, with our interest in the unit completely snuffed out by the agent, and by our lack of knowledge about this situation. The agent made it seem like he had a “following” (his word, not mine) of investors who flipped his listings this way. Does this still happen/work in today’s market?
Brad,
In a situation like this, it MAY be risky for a owner/occupant to buy unit #2 – because, if investors buy units 1 and 3, they may not want to contribute much to the upkeep of the building and the poor homeowner in unit 2 could be stuck with a nightmare!!!
“The listing for #3 claimed homepath financing available, so it’s probably not completely unfinanceable.”
HOMEPATH FINANCING?
“Down payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer”
Ohhh yeah let’s go! All we need is a loan from a NPO or the government for 3.9k and we’re on the path to home ownership!
Haha normally I’d call buildings like this a financial disaster but the ask prices are low. Dunno the ‘hood. With 129k prices and 4k downpayment this property is approaching hipsterdom levels. And let’s be honest hipsters don’t care about no HOA!
What kind of loan products are lenders offering on Condos were the loan amount isn’t so large. For example after final price negotations after downpayment on this condo your actual loan amount might be around 100k. The fees that i’ve incurred buying a more expensive property, would have been a huge percentage of the loan amount.
Do any lenders offer special financing for under 100k loan amounts?
I helped clients buy a semi-distressed property with Home Path financing. Lots of red tape,etc. but at least they got a place to live in and some “seed money” for repairs which in their case was mainly cosmetic stuff anyway.
BTW “Home Path” is similar to 203-K and is offered on Fannie Mae foreclosures. “Home Start” is also similar and is offered on Freddie Mac foreclosures.
> In a situation like this, it MAY be risky for a owner/occupant to buy unit #2 – because, if investors buy units 1 and 3, they may not want to contribute much to the upkeep of the building and the poor homeowner in unit 2 could be stuck with a nightmare!!!
Whomever owns the other units has to pay the monthly HOA fee no matter what. If they don’t pay, then the association files a lien against the units. They may be reluctant to pay for sure.
“Whomever owns the other units has to pay the monthly HOA fee no matter what. If they don’t pay, then the association files a lien against the units. They may be reluctant to pay for sure.”
Whoever owns the other 2 units can overrule the one o/o, having 2/3s of the votes in the association.