Who’s Laughing Now? Flippers/Rehabbers Rolling In The Cash: 1528 S. Wabash in the South Loop
We chattered about this 2-bedroom loft at 1528 S. Wabash in the South Loop numerous times over the years as it went from a normal sale, to a short sale, to bank owned and then, this summer, to a flip.
See our June 2012 chatter here.
From the before and after pictures, it appeared that there wasn’t a major renovation done to this unit. You can see the bank owned pictures here.
The kitchen and baths were intact when it was bank owned and were the same in the recent sale. The bank owned listing even had stainless steel appliances.
The latest listing said it had “new stone (quartz) counter tops.” From the pictures, it appears those were replaced in the kitchen and the bathrooms.
There also appeared to be a new tile backsplash in the kitchen.
Despite many of the Chatterati thinking this seller was going to get burned trying to re-sell this unit for nearly $100,000 above the March sale, that didn’t happen.
Instead, this seller made $90,000 on the sale in just 6 months.
Even if you deduct transaction/assessments/taxes and rehab fees- that’s not too shabby for 6 months worth of work.
Does this sale speak to the change in the overall housing market? (i.e. that the bottom has past.)
Again, I ask, why isn’t everyone rehabbing/flipping?
Scott Fey had the listing.
Unit #608: 2 bedrooms, 2 baths, 1200 square feet
- Sold in January 2004 for $268,000
- Originally listed in October 2008 for $299,900 (parking is extra)
- Reduced
- Was listed in February 2009 for $284,900 (parking was $34,000 extra)
- Reduced several times
- Was listed in May 2009 for $261,900 (parking was $28,000 extra)
- Withdrawn
- Listed in April 2010 for $289,900
- Reduced
- Was listed as a “short sale” for $214,900 (plus $25,000 for parking)
- Withdrawn
- Bank owned
- Originally listed in October 2011 for $229,000 (included the parking)
- Reduced
- Was listed in December 2011 for $169,900 (included the parking)
- Sold in March 2012 for $155,000(included the parking)
- Was listed in June 2012 for $249,900 (included the parking)
- Sold on August 31, 2012 for $245,000 (included the parking)
- Assessments of $433 a month (includes heat, gas and cable)
- Taxes are now $4032 (were $3656)
- Washer/Dryer in the unit
- Central Air
- Bedroom #1: 14×12
- Bedroom #2: 12×11
- Living room: 14×18
- Kitchen: 14×9
Time for a Cribchatter vulture fund?
Not everyone has the connections needed to get to the person who can actually approve a bid you make on most REO properties… thats why not everyone is doing this….
I believe these are still anomalies and not the norm. I bet you could easily feature a property tomorrow where someone got hosed.
There is a lot of uncertainty around rehabbing unless it’s totally cosmetic and superficial. If you have to open stuff up or move things around you just don’t know what you are going to run into. In fact, what you can count on is that it’s going to cost you more than you think. And then there is the chance you’ll get it wrong and no one will like what you did. Therefore, it has to offer a huge profit on average in order to compensate for the occasional huge misses and the PITA factor.
“I bet you could easily feature a property tomorrow where someone got hosed.”
I haven’t covered any rehabs yet where the seller got hosed (including those in Galewood and the western neighborhoods.) I’m sure some, somewhere exist. I encourage anyone who comes across a rehab where the seller is going to get hosed to send it to me so I can cover it.
So far, all I’ve seen are investors making money.
“Not everyone has the connections needed to get to the person who can actually approve a bid you make on most REO properties… thats why not everyone is doing this….”
Sonies- this property was sitting around for years. Not all the bank owned properties sell within 24 hours of being listed. Far from it (usually because the bank lists too high out of the gate.) Sure, some of them you have to be the brother of the agent on the listing. Yeah- I’ve seen those. But others you don’t.
Yet all I ever hear from the Chatterati is excuses about how the rehabbing can’t be done by just anyone. Sure- the completely trashed suburban single family home with the flooded basement might be a problem. But a lot of other properties aren’t.
“I haven’t covered any rehabs yet where the seller got hosed (including those in Galewood and the western neighborhoods.) I’m sure some, somewhere exist. I encourage anyone who comes across a rehab where the seller is going to get hosed to send it to me so I can cover ”
uhhhhh….you don’t have enough space on this site to feature my portfolio of lost losers…….
Clio-
You bought a foreclosure or estate sale in the city in the last year and rehabbed it and sold it for a loss? I’m not talking about people who bought investment condos in 2005 and got burned trying to flip them during the bust. I’m talking about all the investors buying the foreclosures or cheap properties right now, fixing them up and re-selling them.
I haven’t seen any where the seller got hosed (on the north side at least.)
” I’m talking about all the investors buying the foreclosures or cheap properties right now, fixing them up and re-selling them”
No – you are right – but to answer your question of “why people aren’t doing more flipping” there are 2 likely reasons:
1. The weekend/part-time flippers (like me) who got burned in recent years are still recovering (financially and emotionally) from our huge losses – once bitten, twice shy syndrome – so we are a little turned off by the risk/uncertainty.
2. The true construction/builder-type flippers got TOTALLY financially burned in the bust and have no money to re-start flipping.
That only leaves new flippers and very rich construction/builder-type flippers – both of which are practically non-existent!!!
I would NOT be encouraging anyone with a small amount of money, spare weekend time and dreams/fantasies to start this process without doing a ton of research…even home depot weekend seminars… ANYTHING to get the information required to be able to identify problems hidden behind walls, under floors, above your ceiling drywall and even walking the roof looking for those small problems that end up becoming a bottomless money pit. You have to know what you are doing or are a sort of ‘apprentice’ working with highly experienced, successful professionals who have survived intact after the past 4 – 5 yrs hell those of us in this industry have faced.
Personally, I backed off taking off any new projects for myself and took on many new projects where the new buyers/DIY neophytes did not know what they were doing and did not realize this fact until after they completed their demo process.
While I did lose a bit of investment $$, overall I survived the disaster rather well because I proceeded very carefully and discontinued buying in markets that were seeing little chance of improvement. The majority of areas of NYC and some properties in S Fl were having little if no problem of retaining their value and they were the ones that were investment worthy.
But again, without having the know how and available funds to be able to turn dilapidated or abandoned properties into a money makers while being able to maintain a good variety of completed work ready for sale (think of newly remodeled units sitting empty without performing general maintainance and how quickly they can become unlivable) I still advise new, would be flippers to sit it out a while longer before you start work on becoming the next Trump!
To address Clio’s last post is the reason you lost so much of your investment is that you were not as dedicated as you projected you were. While you were sitting on your computer calling everyone idiots all day, you lost out on your opportunity to actually turn a profit on your works. This is a business that has changed so rapidly..sometimes on a daily/hourly basis..that unless you were ready to jump in at a moments notice and be ready for every little thing that could go wrong, those investment dollars would have served you better as ass wipe!
To reply to your comment #2….not everyone lost all of their money, only those who had no business being in this business to begin with.
“Again, I ask, why isn’t everyone rehabbing/flipping?”
Money is not as easy to come by for flipping, investment or construction loans. Many of the deals out there are cash only. That is a large barrier to entry for the first time flipper.
“Money is not as easy to come by for flipping, investment or construction loans. Many of the deals out there are cash only. That is a large barrier to entry for the first time flipper.”
You’re right ChiBuilder. Money is a HUGE barrier. Most of these deals are cash only and then you have to have the cash to do the rehab.
“R L Natario (September 11, 2012, 7:49 am)”
WELCOME BACK WESTLOOP!!! We all missed you!!
Sabrina – This just begs the question: if you believe it is so easy to do, why aren’t YOU doing it? Is it not so easy a part-time real estate blogger can do it?
You definitely need to know what you’re doing. I see all these shows on HGTV like “love it or list it” and “property brothers” and it looks so cool but those folks have and ARMY OF PEOPLE who do things. They have the know-how and all the folks who’ve done dozens of structural rehabs.
I can get someone to swap out the countertops or re-tile the floor in the bathroom or kitchen… but breaking down walls, making and “open floor concept”, expanding the bedroom, etc. needs real knowledge.
I bought a gut-rehabbed 1bd in Lincoln Park in 2001 and the quality wasn’t great but it has been an amazing rental property. I wish I could buy a total dump and make it something amazing. Unfortunately I can’t (right now) I just don’t know the people who can make it happen.