Why Not Convert It? 1509 W. Addison in Lakeview
This 3-flat greystone at 1509 W. Addison in the Southport neighborhood of Addison has been on and off the market since July 2008.
In that time it has been reduced $234,000.
The listing says there is a one year old roof and recent tuckpointing.
The three units also have “upated” kitchens and baths.
The units are as follows:
- Unit #1: 2 bedrooms, 1 bath
- Unit #2: 2 bedrooms, 1 bath
- Unit #3: 1 bedroom, 1 bath (garden unit)
There is steam heating and no central air (window units only.)
Built in 1898 on a 22×134 lot, the property has a 2-car garage.
The rents are not listed so we don’t know if this is cash flow positive.
But what if you were to convert it to a single family home instead?
It’s far cheaper than most homes in the neighborhood of comparible size.
Mark Weitekamper at Haderlein & Company Realtors has the listing. See the pictures here.
1509 W. Addison: 5 bedrooms, 3 baths, 3-flat, 2 car garage
- Sold before 1986
- Originally listed in July 2008 for $799,000
- Reduced numerous times
- Currently listed at $565,000
- “Motivated seller”
- Taxes of $10121
- No central air
- Steam heat
I really love the fron facade, and this stretch of Addison isn’t too bad despite the traffic. There are good front setbacks and street trees.
Plus, the new Jewel on Southport and L in easy walking distance. Maybe list is a bit much for a conversion, but it may be reasonable if you do/could keep the basement unit for rental.
But Sabrina, looking at the aerial on the Redfin listing there is no garage, just a parking pad. The property Redfin has outlined in the listing is the wrong one.
Yeah I was thinking the same thing, convert the top two floors and keep the garden as a rental for a few years.
Please find me one of these west of Pulaski 🙂
“Agent Remarks: Vacant – easy to show “
I don’t see any way possible for this place to be cash flow positive at $565k. I don’t think any properties in this area are at ask, the location is “too desirable” to be priced near turn key.
Comps in the area would indicate a $500-550k sale, but I couldn’t go that high, then again thats why I don’t live over there.
Another long time owner/unrealistic seller trying to gorge on the real estate feast…..
Too bad they’re a few dollar short of the market price and more than a couple days late.
“I don’t see any way possible for this place to be cash flow positive at $565k.”
I see more and more investors buying stuff nowhere near rental parity because they believe that the property will significantly increase in value.
Below is an example of a “tear down” property that sold across the street for me. It was bought at 1.3 million for land value and now is for rent for 2500/month. i wonder what these people know that we don’t…..
http://www.redfin.com/IL/Oak-Brook/219-Oak-Brook-Rd-60523/home/18082980
something’s wrong with that picture…
“I don’t see any way possible for this place to be cash flow positive at $565k.”
Depends on your cost of funds. Probably could get $3k/mo total, gross rent reasonably easily, which is about a 4.5% return, which is “good” to some cash buyers.
If you want to convert it, 3517 Hermitage would be better. And the Bosworth house featured last week would end up being about the same price, for the same overall quality, on a much larger lot, not on a busy street. Have to *really* want the greystone for this one to make sense.
Why NOT convert it?
Because the LAST thing the northside needs is another
Cubs fan, north face wearing, Lexus SUV driving big ten
yup family.
@ Clio….I am very concerned that you just gave your adress out on CC…..I think that you should delete that post!
I will now crawl back in to my paranoid little hole……
“I am very concerned that you just gave your adress out on CC…..I think that you should delete that post!
I will now crawl back in to my paranoid little hole……”
He’s referenced a property held in his name more than a few times. With a (not common) name, and a general location, it’s reasonably easy to figure out where someone lives, so this is hardly a big clue.
Plus, he talks about a rare-ish car valeted at the Palmolive frequently. Anyone *really* trying to find him, could, easily. Unless he’s not actually telling the truth.
[cue “everything I post is true” post]
Well i believe it, despite what all the naysayers here go on about I think there is good to be a small surge once all these foreclosures dry up. And as such i’m trying to acquire as many properties as possible. Even putting out offers for 50k properties with financing.
So leveraging myself as much as possible to acquire more, the differnce difference is that im not getting a negative return in the short term like Clio’s new neighbor, im getting at least 10% net return on my cash i put into the deal.
C- yeah- what anon said. …….
basically, I didn’t realize there were so many references to figure out who I was. I referenced a property I owned (it is in an LLC) and didn’t think it would have my name attached to it. Of course it did and then everyone figured out who I was. Whatever… once the cat is out of the bag there is nothing you can do about it. Actually, it keeps my posts a little more honest.
Clio, so you aren’t some hotshot developer trying to independently stir up Chicago real estate by doing lots of positive blog postings! 🙂
clio:
If you’d never brought up that prop again, it likely would have died–I certainly wouldn’t refer to it at all. You obv. just don’t care that much.
gesco – ha ha – I wish… maybe someday, with your help…..
Clio, …. its in the works
Does anyone know can you get 203k loan to convert a 3 unit to SFH, and if so would that allow you to get over the limit for a SFH conventional loan.
If so I could see someone buying this place, but short of that, the buyer would need to have alot of cash on hand… and if they had that kinda cash they would be better of just getting a SFH with financing.
Price has gotta drop
Lets say that the 2 bedrooms each rent for 1200 and you get 800 for the Garden (which is very optimistic). Thats only 38,400 a year gross. And after taxes 28k.
In this 3-4 unit market there are better places, that have better than 5% returns.
“In this 3-4 unit market there are better places, that have better than 5% returns.”
Of course there are. Heck, 10 of your $50k crapshacks are a better bet for cashflow return, and you diversify your capital risk a little.
As a investment property rental, I have a hard time understanding it at anything above $375k, unless it’s entirely an inflation/appreciation play.
“As a investment property rental, I have a hard time understanding it at anything above $375k, unless it’s entirely an inflation/appreciation play”
exactly – a 4-5% return is ok – not great – but what if you convert to 3 units and, in 5 years, sell the bigger units for 275-300 and the smaller one for 250k (after putting about 150k into it). You increase your return to around 10% – not bad (of course it is not great, but definitely not bad….)
Anon, Hey they arent crap shacks!!! you would be amazed at what you can get for under 50k… you just gotta be ready to move fast to snap them up. In the building where i bought a condo for 45k (1992 price) another identical condo just sold in the 13 unit building for 79k, which is still a deal for the area.
Clio, im following what you are saying 100% and agreed those units have condo potential but at %5 Return now… and a modest profit after the condo conversion there are much better values out there (although those you keep to yourself).
But this will definitely sell for more than 375, i think 500-525. Not that I would buy it at that much, but i think that will get it sold.
Im pretty sure I can sell my 45 unit for 100k in 1 or 2, more than doubling my money and in the meaning time making 10%+ net on my 45k
“Anon, Hey they arent crap shacks!!!”
My point was, even if they are, better gamble of $500k than putting it all on black.
“But this will definitely sell for more than 375, i think 500-525.”
I agree. I just don’t see the math. G would call them a KC and, at least in real $$, be right.
Anon, I agree I wouldn’t buy it at 500-525, but people out there will.
22′ wide lot = fail. Although the “master” bedroom has a little bit of width with the bump out. You really feel that lot when you walk in though.
Should sell over $500K easy this spring for owner operator. If this was a deal for future conversion Mangan would have bought it already like eveything else over there!
Clio-
What you are suggesting is speculation, not investing. Sure, you could buy, renovate, and sit and wait for prices to go up while you are cash flow negative. I’m just not sure why you’d do that over many other investment opportunities…or… Wait for it….buying a place that cash flows.
Maybe add a roof top deck with high-powered telescopes for “watching” Cubs games?
But seriously folks – this IS a kid-friendly situatuon with several good schools within easy distance: Hamilton, St. Andrew’s, Lane Tech + Gordon Tech.
tay – I get your point and I am definitely not suggesting that this property is a GREAT deal – I am merely trying to show how an investor could make money on this place.
I wrote about the properties in Oak Brook (where investors are putting huge amounts of cash for properties that are VERY cash flow negative) to show that there are many investors who, right now, even in this market are investing heavily in real estate. These are not poor stupid morons with 0% loans – these are 100% cash buyers and investment sharks. I have found that observing THESE types of peoples’ behavior is probably the best predictor of future house prices. Again, these people are experienced, seasoned investment sharks who are NOT going to lose money in the end. The behavior of these people is more accurate than the CSI, CRains bull-sh@t that is published. Anyway, my conclusion is that cash-flow negative properties may not be a bad deal and, if you look to the future, you may be overlooking some very good investments.
Clio, i think right now if someone is pursuing a cash flow negative investment they know something that no one else does, or its part of a bigger project. There are just so many cash flow positive investments out there why would you pursue something were you are getting a negative return.
” There are just so many cash flow positive investments out there why would you pursue something were you are getting a negative return.”
To me, there are two types of investments: short term and long term. In the real estate market now, I don’t see short term investments being reality/realistic or easy. That leaves long term investments. Sure, it would be great to have a positive cash flow investment and hold on to it – but the bigger long term returns may be in the negative cash flow properties (as these properties can be bought for a much much much cheaper price and only people who have money will buy these places – thereby excluding a huge pool of buyers). This is why so many people buy land/vacant lots and hold on to them for 10-15 years. I have personally seen people make millions doing this.
Clio, if you have a special opportunity to purchase a lot of vacant land, sure thats something were you have a definite opportunity to make a huge return on once the market picks up.
But in the instance of this 3-flat sure you could turn it into 2 viable condos and a garden unit. But there might be a 4-flat, no garden unit out, there that is producing 10% return and when you turn it condos in the future it would 4 viable condos and make a much bigger return.
It isn’t that the 1st option with the 3-flat isn’t going to make a good investment, its just won’t be as good as others.
I bet you bought your “farm” with that in mind, right? As a future development opportunity?
“This is why so many people buy land/vacant lots and hold on to them for 10-15 years. I have personally seen people make millions doing this.”
For this area I like this property better, sure it needs a little work. But I think its a better location and have much better rental value.
http://www.redfin.com/IL/Chicago/903-W-Addison-St-60613/home/13381862
Thoughts anyone?
“I bet you bought your “farm” with that in mind, right? As a future development opportunity?”
Yep – but I made a few mistakes on that one:
1. Not vacant land – therefore there are high upkeep costs and 11k/yr taxes
2. Laziness/age – the property is too far away from me and I just don’t need the extra income – so I just let the automatic direct debits come out of my bank every month. Although the monthly costs are HUGE, I have enough money to cover it and it still doesn’t affect my lifestyle.
3. Absence of incentive: What is my incentive to renovate, redevelop the property? Money? – I really don’t need any more. I want to have that “hunger” or excitement of a project which serves as such a motivating force to me. For me, something has to motivate me in a different way (other than simply for the sake of money). My farm has nothing that excites me, personally. Additionally, any project would take away from my “going out” time which I hold absolutely sacred!!
4. Absence of a partner – I did all of my former renovations with a partner who now has some issues and is unable to work effectively. Without someone to throw around ideas, it becomes boring and tedious.
gesco – I have been looking at that property for awhile. It seems like it would be a great deal for an owner occupant, but it may be too small a place and too big of a project for any meaningful profit. If this goes below 350-375, however, there is VERY LITTLE to lose…..
juliana,
actually the biggest mistake I made was LOCATION. Location is so key it is unbelievable. I know it is a common saying, but people don’t realize how true it is. Land in Oak Brook and Hinsdale sells at such a premium whereas you can’t give land away in St. Charles. This is a lesson I learned the hard way and is why I only want to buy in the most expensive/sought out areas. You are much less likely to lose in these areas.
Clio, I understand a 100% on your hesitation on the 903 addison building, I have it as well otherwise I would have gone for it. But to be honest I could see it going at 375, at 418 its pretty close especially its since its bank owned and they drop their price every 2-4 weeks.
There was actually another fannie owned property on addison that I liked alot, but it was just out of my price range… i even tried to get my parents to move on it but it went under contract to quickly.
http://www.redfin.com/IL/Chicago/907-W-Addison-St-60613/home/13382000
its 6 vs 5 bdrms and the lot is 25×125 vs the 23 x103, the interior is in better shape. I think the buyer got a great deal at 470, perhaps not a steal, but a very good deal.
gesco, I don’t know…. I think you may have dodged a bullet there. I keep thinking that the larger buildings you are able to buy, the better your profit margin is going to be. In Boston, 4-5 unit buildings were most profitable, 3 units ok, and anything less than 3 units was bad (of course this is not a “hard and fast” rule because location and type of property and cost at which you acquire it has everything to do with profit) but, in a given location, at a given price range, that is what I found to be true. The reason is because, if you are doing a gut renovation, dollar for dollar, it doesn’t cost that much more to renovate a 5000 sq ft 5 flat compared with a 3000sq foot 2 flat. In addition, your profit may be higher selling 5, 1000 sq ft units at a lower price than 2, 1500 sq foot units. When you think about it and do the numbers, it will make more sense…
agreed
Clio, Ill defer to your experience here on rehabbing and flipping since you know that first hand better than anyone else on the site.
I was looking at addison as owner occupied potential since I really like the area (so wouldn’t mind living there), and would have tried to get it for 450 with an FHA 3.5%. With the goal of selling it within a year after some minor fixes (fresh paint etc). I figured that with only putting 16k down payment, Even if it i sold it for 600, that would be about a 500% return on the money i put into the deal after expenses.
I understand your numbers though and i never would buy this as investor, you would have to put to much cash into the deal the return wouldn’t have been as much. For example with 30% down on 450, 130k the 150 profit in the sale would have been only about 100% return on my cash vs the 500% if i did 3.5% FHA.
But i’m starting to agree with you very much on the larger buildings after doing a lot of research the last couple days.
yikes i mean 135k for 30% of 450k
Clio,
I didn’t read the threads where who you are was “outed,” but my guess is that you are in a position where RE is more of a hobby for you. You might take it more seriously than a traditional hobby, but your posts and attitude on these boards aren’t indicative of someone looking to maximize the return of their free cash.
I read this site almost every day. I started reading it a few years ago because I thought RE would be a great way to diversify and to increase my NW. I read it now because I enjoy it and because eventually I will purchase a home and I’d like to be as informed as possible before I do that. It’s “investors” like you and the ones that you reference that make RE, IMO, a pretty meh place to park a bunch of money *UNLESS* you have access to truly superior information/deals.
Buying a place that is cash flow negative or that offers less than a 5-10% cash on cash return seems borderline insane. Why would you speculate when you don’t need to? If you are smart and have more than a few million dollars in the bank, you don’t need to speculate. Furthermore, RE/RE development can be a huge pain in the ass, there are equal or better returns to be had and all you need to do is write a check.
Sorry if this comes off as being a dick, I just don’t agree with nearly anything you are saying in this post. It doesn’t make any sense to me.
Tay, Clio is big on development. So more the capital gains income other than passive income. Hey its taxed quite a bit less!
Tay, which areas are you looking in for your home?
gesco, unless i misread the 903 W Addison listing, there is no option to build a garage…this sinks it as a SFH option as far as i’m concerned, otherwise you almost had me.
I’m not saying someone else wouldn’t want it, but it’s not for me. From what I’ve gathered, Clio has the experience, capital and psychological attitude to take on a project like this and not be as impacted by the end result as I would.
I’m not saying he would not dread losing money or having it not turn out as he planned, but he could bounce back better than I could if it were unsuccessful.
I’m not really seriously looking anymore. I’d buy in RN, ELP, OT, or the the north burbs when i’m ready to settle down somewhere.
I don’t doubt that Clio knows a lot about real estate, he certainly is more knowledgeable on the subject than I am. I do doubt that he made his money primarily in real estate but I’d love to hear the “Clio story” and be proven wrong. Real estate has been a wild ride over the past 15 years, crazier things have happened than for someone with Clio’s RE philosophy to create extraordinary wealth for himself.
I have a suspicious that clio’s made a lot more money in his day job than real estate. The land baron aspect of his personality is simply a place to park his money of which I have no doubts that he has a lot.
Icarus, Im not sure what your situation that you would be looking to buy (conversion to SFH?0 is but I dont believe the lack of garage would hurts rental values at all in this area, you are super close to the train station and an express bus which goes down LSD.
Tay, so it looks like you are weighing a super long commute (N burbs) vs a small living space. You know there is alot of inbetween neighborhoods if you consider other places than what you listed.
Yeah, that’s basically it. I’ll likely wait long enough to where i can afford a big space regardless of loc, but who knows. As of now i’m pretty set on those neighborhoods.
Have you considered the west town/east village/ukrainian village areas, you are just as close to the loop as the neighborhoods you listed and for the amount of a townhouse in ELP or oldtown you could build your dream SFH
Gesso, I’m sure you do the numbers right when you actually do the calcs, but here you seem to be unreasonably minimizing your carrying costs in your examples.
underestimating costs on a property is a lesson i have learned well, but given gesco’s aims for roi should cushion the blow better than clio’s strategy.
go bears!
Yes the Cashflow from the rent would more than cover carrying costs. I mean think there are MUCH better properties out there to do this with than this property, but the general premise is sound.
This listing claims a “motivated seller”. Can someone here please enlighten me as to what “motivated seller” means? My wife and I have run into this magical phrase in the past during our SFH search in the Lakeview area, but it seems to be meaningless. We looked at this property at 1531 W Wellington back in may 2009 when it was listed at $1,499,000; the listing noted that it was a “motivated seller”, and the showing agent made sure to let us know that he would be willing to entertain any reasonable offer. Here it is, still on the market listed at $1,389,900, only 20 months later (don’t know when it originally went on the market, so potentially even longer):
http://www.atproperties.com/homes/IL/CHICAGO/60657//CHKENH/AGT-16807668650
Does “motivated seller” mean anything?
” I do doubt that he made his money primarily in real estate but I’d love to hear the “Clio story” and be proven wrong”
Tay, I got into real estate in Boston in the early/mid 90s. I renovated 5 story brownstones in the South End (which was just an up and coming neighborhood) and I ended up making a KILLING. I don’t know if that could ever be repeated in Chicago because the housing stock and neighborhoods are so different here. What made Boston SO profitable was the fact that these brownstones could easily be converted into 5, 1 or 2 bedroom units (650-1000 sq ft) – that is the typical size of a condo in the South End. Furthermore, when you are renovating such a small space, costs are lower. In addition, because all of the brownstones were pretty much the same, my crew new exactly what needed to be done in each building and they were able to complete each renovation faster and faster than the previous ones. Finally, prices in the Boston are ridiculous. The typical 700-800 sq ft place goes for 400-450k. The 650 sq ft w/o parking goes for upper 300s- and I am talking about NOW (in this slump). I ended up doing something like 27 units over a 4 year period and make 100-200k profit on each one. It really was like taking candy from a baby. and again, I don’t think that ever can be repeated in Chicago….
oh – if anyone is interested in looking at real estate in the south end, the zip is 02118.
Oh, yeah – in terms of costs. I could buy a rundown brownstone for 450-600, put in 250-300k and sell all five units for a total of 1.5 million (300k each +/-.
Ryan, if I were you on a place that steep I wouldn’t hesitate to put in an offer 20-30% assuming somewhere within that point you think you would be getting a good value.
I see places sometimes go 20%+ under ask. I wouldn’t say it happens often but if the listing agent kept on talking up how the seller would entertain any offer why not.
Seems like you already have your own places picked out, are you using an agent that will rebate you some of their commission. On a place that steep it could be a pretty big check.
Clio, there arent many 5 unit buildings in Chicago. Now that I think about I remember seeing them all the place around boston, especially by BU. Here we have more 3-4 flats with sometime 6 flats and then from there you have you 13-40 unit apartment buildings.
From an owner occupant perspective any building 6 units or under you can claim home owner exemption for on cook county taxes.
The really problem with buying anything over 4 units though is you need a commercial loan, which is expensive and with at least 30% down makes it difficult to leverage.
“I ended up doing something like 27 units over a 4 year period and make 100-200k profit on each one. It really was like taking candy from a baby. and again, I don’t think that ever can be repeated in Chicago….”
What do you think happened in Chicago from 2000 to 2007? Some neighborhoods double or tripled in that time frame. It was just as easy to make money in Chicago as in Boston. Heck, you could make $100k to $200k just buy buying a preconstruction 2 bedroom condo unit in one of the high rises and then flipping it when the building was built.
Ah…those were the days…
Boston in the mid/late 90s was not undergoing a housing boom. I was talking about rehabbing and reselling property in a “normal” market – just trying to point out that you really can make money in any type of market.
Clio, if you look at the Case Shiller for boston condos there certainly was a condo boom! I think value increased almost 50% from 95 to 2000, but certainly not the 100% plus you made after a quick rehab.
gesco, the case shiller is useless in looking at individual properties or areas – it is just a snapshot of the entire city. The South End did not experience such a great price increase until after 2000.
gesco,
We have wondered about buyers’ agents rebating their commission. How frequently is this done, and what kind of rebate is reasonable?
We have not found the “ideal” place yet, so no transaction is imminent — my wife and I are quite happy in our East LV condo for now, and will only move if we find the perfect SFH in Lakeview or elsewhere.
RyanC … I know for a fact there will at least be 2 more short sales/foreclosures on that stretch of W. Wellington. These are newer construction SFH in the 1-1.5 MM range. So just wait and watch the prices drop.
Ryan, If you run the pins of properties you are interested in seeing you can tell if a foreclosure has been filed.
Ryan, my agent that I use rebates me 20% but im buying properties that are under 75k.
When it comes down to it the agent i use to do my 50k condo purchase will do just the same amount of work (probably even more since its a distressed sale) as your 1.2 million SFH purchase , but why should they both get 3% of sales price.
If you are using an agent from one of the bigger brokerages you wont get anything. Go for a smaller one, search discount broker chicago.
Clio also has a brokerage you could ask him if he has a guy that would rebate you 25-50% if buy a property over 1 million.
My advice if you are considering such a big upgrade there would never be such a good time as now to do the purchase. If you are very concerned about price the best value would likely be buying a multi unit or distressed single family home for cheap circa 500k and then turning it into your dream home for another 250k. You end up with your perfect home and saved 500k
ryan if you are open to west town/wicker park/buck town you can find properties for around 200k.
“Clio also has a brokerage you could ask him if he has a guy that would rebate you 25-50% if buy a property over 1 million”
absolutely…..
Tay:
I agree whole heartedly with hd – while I appreciate clio’s unique participation here, his real estate success to date imo is living proof that when the wind blows hard enough even turkeys can fly. I believe clio is (unfortunately) destined to lose those profits to date, his equity and possibly more to others while steadfastly clinging to (imo) strongly held but very ill conceived beliefs.
Southbound … do u know the guy? why would u make such assumptions?
At least he has made money at some point of time. You guys are just hating on Clio. Leave the guy alone and go make your own money. Honestly you guys sound sad.
I am not a hater & I only know Clio via what he posts. I acknowledge Clio must have expertise at his day job but question his skill in real estate – so what? Since the person behind Clio’s name uses more than one persona here & is hyper-sensitive to real or perceived criticism I am curious to know if either of the post from “ss” or “miumiu” are from same person who posts as Clio?
“Since the person behind Clio’s name uses more than one persona here & is hyper-sensitive to real or perceived criticism I am curious to know if either of the post from “ss” or “miumiu” are from same person who posts as Clio?”
The answer would be: “no” and “no”.
They are not from the same person.
Thanks S. Do you recall the person behind Clio accidentally posted a response to a question asked to Clio under a different name and then claimed a co-worker had logged onto the same computer? Coincidentally iirc that same poster had earlier scolded me for questioning Clio’s real estate expertise re his farm. On a related note see this comment to Crain’s article about foreclosure against a failed residential lot sale program also west of St Charles but not right by the sewage treatment plant.
“The estimated price of the lots from $30K to $50K are retail prices which have an associated absorption rate of 10 to 12 years. With holding costs (taxes, insurance, etc.) approximating 5-7%, this property has virtually no value for a bulk buyer.
Assuming you could even find a buyer in the next 12-18 months, this property would probably only bring $5K to $7K per acre as residendital reverted farmland (RRF) which equates to about $1K to $2K per lot.
Making this situation worse is the gas price forecast of $4.00 per gallon, continued high levels of unemployment and residential real estate not expected to begin to recover until 2014.”
http://www.chicagorealestatedaily.com/article/20110120/CRED0701/110129995/foreclosure-suit-hits-big-planned-kane-county-subdivision
I’m not hatin’ I’m just sayin’…
Thanks for the advice gesco and ss. Wife and I are not particularly interested in bucktown/WP — would love to stay in east LV, but more SFHs available in west part of LV.
Southbound, I appreciate your interest in me and my properties. The land you reference in your post is actually in Elburn (which is another suburb west of St. Charles). Although it is in the same vicinity, they are completely two different types of properties in 2 completely separate areas. It would be like comparing a condo on LSD in the gold coast to a similar condo on LSD in Edgewater.
However, like I said, I DO appreciate your interest in my life.
Well I don’t know about the rest, but I am a female and I think Clio is a male and at least a decade or so older than me. When he was making money in 90s in Boston, I was in school and not even in this country : ) I for sure don’t have millions of dollars and am an average person and have no idea who SS is. Just because someone disagrees with what you say, you should not just immediately assume there is a conspiracy.
haha, geez guys! why’s everyone hating on Clio, the guy bought rehabbed and sold 27 condos in 4 years why he was in residency and made over a 100% return on every one of them…. and all this while he was in his residency, Can anyone here even come close to the same thing?
“Just because someone disagrees with what you say, you should not just immediately assume there is a conspiracy.”
Nor should you assume that they are jealous haters who need to go out and make their own money. The “no assumptions” thing works both ways.
“while he was in his residency”
Thought it was med school. And I don’t think he had as little cash in them as you do, so his gross irr was probably a bit lower. But those are quibbles.
The landscape is littered with the burnt out remains of bankrupt flippers, rehabbers, contractors, developers, realtors and brokers. The few who got in and got out at the right time made good money and hopefully put it to good use. But so many did not. clio has a day job to fall back on, a day job that pays very well, and i’m sure that masks a substantial amount of his paper real estate losses today.
hd – that is the important part about being any type of investor – you have to know how much risk you can take. I knew not to overextend myself and have done quite well. Most successful people out there do the same (slow, but steady returns). Those who don’t understand that (and are trying to make a quick buck) will not only likely lose out in real estate, but probably in other areas as well (as it is a personality/behavioral flaw that manifests in ALL areas of life).
So really, you need to hit triples and home runs early on, and then pare back your risk from there. The problem is when you are just hitting bunt singles, and then you are caught trying to steal second. There aren’t that many opportunities for small investors these days unless you are willing to take on lots of risk, at least lots of risk from my perspective. Back in 2003 and 2004, you could throw borrowed money at something and make a bundle without trying because the market was going up, up, up. The key was to sell in 2006 and park the money.
ahhh, baseball references – I can’t frickin’ wait!!!
Dave, I completely understand – but maybe real estate is NOT the proper investment vehicle for those people. Real estate investment requires a lot of money, a lot of time and involves risk. The benefit is that it could be extremely profitable – however, like I said, it shouldn’t be even considered by people who don’t have either money, knowledge, time, or connections. Why would you do that to yourself?
Real estate is a very cyclical investment, and often when dealing in transitional neighborhoods, you need to have a specified investment horizon, and stick to it if you’ve realized some decent gains – unfortunately, unless you do a 1031 exchange type transaction, you will have to pay some capital gains taxes. The problem is, you have to continue to own properties so you defer those taxes. So you have to pare down your risk as the cycle progresses, so you aren’t left holding the bag.
“unfortunately, unless you do a 1031 exchange type transaction, you will have to pay some capital gains taxes. The problem is, you have to continue to own properties so you defer those taxes. So you have to pare down your risk as the cycle progresses, so you aren’t left holding the bag.”
One successful example I know of was a guy who started v. small (he wasn’t a professional) and kept adding and trading up ’til he 1031’d his apartment building(s) into NNN commercial real estate with credit tenants, which was the point when he stopped doing the maintenance. So, lucky (in timing) + good is very helpful.
“The landscape is littered with the burnt out remains of bankrupt flippers, rehabbers, contractors, developers, realtors and brokers.”
This is SO true…so true that many readers of CC have a very, very difficult time believing Clio when he goes on his ‘invest now for huge profits in the future’ speeches.
I don’t think those who disagree with him are actually hating on him, but rather find his stories and eternally optimistic outlook on becoming a mini Trump in the RE market a bit outrageous and not at all based in reality.
While clio might claim to be psychologically strong enough to handle losses, if this is true, it is pretty devastating to see properties that you had hopes of making huge profits on losing 50% + of their real value. I personally know of many once successful RE investors who are in such a depressed state now…they lost most all they had. It is just not a pretty sight at all and I couldn’t wish this reality on anyone. Devasting.
While I personally did not lose much, if anything, I am stuck with many units, in many cities that are now rentals. Even though they are all now rented, I had no plans of becoming a landlord of nearly 100 properties. Paying for the management, taxes, upkeep, etc. is a huge headache, but for me that is now the reality. Going from a successful renovator whose projects never sat on market for more than 3 months, to realizing I would be a landord…for years…is hard to accept. This ‘psychological reality’ is a very hard thing to accept regardless of who you are or how much money you might have in your bank account. And to even think of encouraging people who do not possess a strong RE business sense or background is just plain irresponsible.
While I am still very comfortable financially and while I would be able to resume my business as it was before, I could not, with a clear conscience, advise others to enter the market at this time with even the slightest hope of building personal wealth in the future…whether that ‘future’ was a few years… or ten years down the road.
At this point in the game there are too many (negative) variables that are out of our control making RE investments too risky…regardless of how much money one might have.
Heck, now I am even advising against buying a home even if one would occupy it as their own residence for the next 10 + years. Rent now and wait out the game.
Even as a ‘hobby’ using disposable income, it is simply not a good idea.
Dave and Clio, I dont agree with either of you about having to have alot of money to be active in real estate investing or no opportunities for a small time investor.
I think there are a tremendous opportunities to do investing at a smaller level. Sure you’ve gotta be creative with financing and really have a good network of lenders. And its more time intensive.
There are a couple great condo opportunities out there under 100k for which the rental return is about 15%. Typically 2 bedrooms since for rental purposes they have a much better return than 1 bedrooms ( I find they cost 20-30% more but give you 50-70% more in rent since there are two people paying rent.
And since you are buying the property so cheap 75-66% under peak its very likely in 1-3 yrs you will be able to sell at significant profit.
The challenge is finding a bank to lend on the property, many banks wont do loans under 100k, let alone 50k.
“I personally know of many once successful RE investors who are in such a depressed state now…they lost most all they had. ”
And it’s far from just affecting “little” guys like folks who post here. Harry Macklowe had over $10 billion of NYC real estate, and has been teetering for 3 years now.
westloop, believe it or not – I absolultely completely agree with you in regard to the emotional effect of this real estate downturn. Although, like you, I have not taken any hits on my real estate (as most of it is rented and rents cover the mortgage/taxes) it IS depressing seeing a “paper loss” of greater than 1 million. It absolutely WAS devastating. When I say “was” I really mean it. You begin to realize that life isn’t just about money – in fact, money should only be used as a tool to improve your life: too much of it spoils you and, with each thing you buy there is a diminishing psychologial/emotional return.
That being said, I think real estate right now could be an excellent investment for certain people. I know that I can make a lot more money in real estate now than I could have 5 years ago (that is because the cost of buying a place right now is so low). Everywhere I look I see opportunity.
gesco,
I appreciate your view/opinion. You are correct in realizing that there are tremendous opportunities out there right now. Just be very careful because you never know what hidden costs can arise and you have to be prepared for them. That is the only reason I suggested that people with money who are able to withstand these expenses/losses might be better off as opposed to someone whose financial well being may be “devastated”.
“What do you think happened in Chicago from 2000 to 2007? Some neighborhoods double or tripled in that time frame. It was just as easy to make money in Chicago as in Boston. Heck, you could make $100k to $200k just buy buying a preconstruction 2 bedroom condo unit in one of the high rises and then flipping it when the building was built.”
Chicago and Boston are very different. Boston has strict zoning requirements and is built on a penninsula. There are very few high rises and unlike Chicago, it’s not easy to start sprawling out new construction to the west, north and east. That coupled with a huge number of college renters has shot the demand up for housing. Clio is one of the fortunate to have bought in Boston in the 1990’s, but there is a flipside to everything. In the 1990’s while Boston was a dog, I invested in multi-families in Worcester MA (the next up and coming MA city). Over the next 10 years me and my partners lost a total of $500k before we got out. Being a landlord of multiple units just sucks, unless you are one of the fortunate like Clio.
“…You begin to realize that life isn’t just about money…”
Sure YOU might have the good fortune to have this outlook, but for those who are in the midst of losing their life’s work, it IS all about money.
I am fortunate to not have lost my life’s work, but I do feel the pain of those who have not been as fortunate.
And it is hard to read your words as you sound so removed from reality.
And it is hard to read your words as you sound so removed from reality.”
wtf are you talking about??!!! I see frickin reality every day – and the reality is that money is not that important when you have serious medical issues. Take whatever money you have (little or a lot) and make the most of it. Enjoy your time with friends, family, make a difference in the world/someone’s life and stop wallowing in self pity because you lost x amount (whether that is 1 dollar or 1 million) in investments (real estate). I know this is easier said than done but I have wasted too much time being depressed about financial losses – and finally realized (about 6-7 months ago) that it was just not worth it. Even if I started again with 0, I still would be ok….. Mental and psychological stability and health are the most important things in the world. NOBODY can take that away (except you, yourself).
Clio, you are right in saying you need to be prepared to take risks.
A small time investor needs to be just as prepared to lose a % of the 25k they put down in a 100k condo as the 100k a bigger investor puts down in their 500k condo purchase.
I just feel after studying the market there is much more opportunity to exceed rental parity in the micro condo market.
But im not going to lie its not a headache the amount of work i put into closing a 50k condo purchase is the same as the investor who does a 500k purchase. Sure the return is much greater on the money i have in the deal, but my time is also worth money.
Every evening i spend about an hr studying the MLS to see if anything comes up, and for the great great deals, they are listed and go under contract the same day. It’s alot of work to stay on top of everything.
gesco, I hear you – I do the same thing – I cannot tell you the number of hours I have put in. Actually, when you look at it that way, I probably would have made more money working at McDonalds!!! This is why you have to have a passion for real estate to make it have any sense. If not, your life will be unbearable!!!
anon your logic is so flawed. There is no evidence to support I am the same person as Clio what so ever even a shred of it. There is ample evidence from the posts that they are bashing someone who has made money. So while I cannot prove beyond reasonable doubt, they cannot even hypothesize.
there is no more evidence they are bashing him bc he made money, than there is that you are he.
I am he
anyway … why doesnt S name the site “cliochatter”
“there is no more evidence they are bashing him bc he made money, than there is that you are he.”
Bingo!
Especially in the context of “you shouldn’t assume [negative thing X]”.
To be clear, I don’t think there is a shred, nor a pixel, nor an electron of evidence that miumiu *knows* clio, much less *is* clio.
But neither should one assume that because a person being bashed has money it is because they have money and not any other (in this case, many) possible reason (esp, b/c that thinking means that Trump, eg, is off limits). Especially when we don’t actually KNOW that the person has money.
I made my comment after reading things of the sort:
“I agree whole heartedly with hd – while I appreciate clio’s unique participation here, his real estate success to date imo is living proof that when the wind blows hard enough even turkeys can fly. I believe clio is (unfortunately) destined to lose those profits to date, his equity and possibly more to others while steadfastly clinging to (imo) strongly held but very ill conceived beliefs.”
I mean common predicting someone else will lose his profits and all is a bit much and it was not the only comment. It is ok to disagree with someone’s logic, but posting multiple post bashing them sounds like hating to me. But of course it is a personal opinion.
“posting multiple post bashing them sounds like hating to me. But of course it is a personal opinion”
Oh, definitely hating. Defend clio all you want; I tease him, but I don’t think in anything like the same way.
But this, from you:
“At least he has made money at some point of time. You guys are just hating on Clio. Leave the guy alone and go make your own money. Honestly you guys sound sad.”
is what I was taking issue with. No need to assume that’s because the basher hasn’t made their own money ever.
Also, with the amount of parlor-room econ bandied about here, it’s as easy to hypothesize you are clio as it is to hypothesize the proverbial can opener.
Fair enough anon. You have some valid objections : )
It just bothers me when instead of addressing a comment, first thing someone does is throw in a conspiracy theory to detract from the substance.
“It just bothers me when instead of addressing a comment, first thing someone does is throw in a conspiracy theory to detract from the substance.”
Bothers me, too, but sometimes making a big deal about it just perpetuates it. Especially on the intertubez.
“Especially when we don’t actually KNOW that the person has money.”
…but you do – remember that day I was outed and someone found out where I lived, what I did, how many properties I had and what my mortgages were? The only reason I bring this up is so that people DO realize that I am telling the truth, and DO have a lot of experience in real estate and have skin in the game. It IS somewhat important to know someone’s background (especially when they post so much) so that each person can decide for themselves what the motivations and background may be for what they say…
thanks miumiu for defending me – I DO appreciate it!!! 🙂
if bob doesnt hook up with dollface soon, clio might be the first to find love on cc
@clio
what about the possibility that Brutus is posing as a radiologist?
or just because someone exists in public record doesn’t mean that the persona on the web is the actual person.
…just saying
Sold for $502k… just a bit off the initial 08′ mark of $799k.