Hello to all my blog readers out there. Today I want to
take a look at investing in condos. This is an interesting
niche for investors. There is an interesting dynamic happening in some Chicago neighborhoods.

Condo prices are relatively low and rental prices are relatively high.

This creates an excellent opportunity for investors.
Today I will look at the Bronzeville neighborhood in detail.
Bronzeville is one of those neighborhoods that has great
investment potential because of this very dynamic.

I have helped investors purchase condos in this neighborhood.
I have also helped many tenants rent condos in this neighborhood. So the next logical step for my business is to provide a complete solution for investors. I will help with the purchase of a condo and provide assistance all the way through finding a qualified tenant to move in. This is a turn-key, A to Z, solution.

So today we will look at two case studies.
We will also answer an interesting question:

Which is more profitable: a 2 bedroom condo or a 3 bedroom condo?
The answer may surprise you.

CASE STUDY 1

A three bedroom two bath condo was recently purchased in Bronzeville near King Drive and Oakwood. It is 1,475 square feet. It has hardwood floors, a fireplace, and it comes with a parking space.

It was purchased for $67,000 and it was in move-in condition. The property was purchased by a cash buyer.
This is a typical purchase price for this type of
condo.

Analysis:

The median rent for an updated 3bed/2bath condo in Bronzeville
is about $1,500 per month. If your unit is in great condition
like our subject property, I can get it rented in about 30 days.
You should have low turnover because Bronzeville is in demand by renters.

At $1,500 per month, the gross scheduled income is $18,000 per year. Next, we will look at expenses so that we can figure out our Net Operating Income (NOI).

Expenses:

Taxes: $3,666
Assessments: $1,800
Water: $600
Insurance: $1,000
Vacancy: $900
Repairs: $900
Prop Mgmt: $1,440
———————–

Our expenses total $10,306.
This gives us a Net Operating Income of $7,694.
Here are our key metrics for this investment:

Net Operating Income: $7,694
Cap Rate: 11.5%
Years to Break even: 8.71
Monthly Cash Flow: $641.17
NOI/square foot: $5.22
Price per square foot: $45.42

So, we see that this is a pretty good investment. Our
capitalization rate (cap rate) is 11.5%.
For Chicago investments, most investors are looking for
cap rates between 10% and 12%. A cap rate in this range
is considered a good one. Since there is no loan involved,
your cap rate in this case will equal your return on investment.
This investment will pay for itself in just under 9 years.
You may realize additional gains if the home values appreciate
during this time period.

==============================================================
Now let’s look at our 2nd case study which is a 2 bed/2 bath condo in the same neighborhood.

CASE STUDY 2

A 2bed/2bath condo was recently purchased near 48th and Vincennes.
It is a 950 square foot condo. It was purchased for $42,000.
This one was also purchased by a cash buyer.

This was rented about a month later for $1,250 per month.
The gross scheduled income is $15,000 per year. Next, we will look at expenses so that we can figure out
our Net Operating Income (NOI).

Expenses:

Taxes: $2,028
Assessments: $1,5480
Water: $400
Insurance: $1,000
Vacancy: $750
Repairs: $750
Prop Mgmt: $1,200
———————–

Our expenses total $7,676.
This gives us a Net Operating Income of $7,324.

————————————————————-
Side bar:

At this point in my analysis, I thought to myself
“Wow Mark! what a stunning revelation”

A two bedroom condo yielded a NOI of $7,324 which is only $370 less
than what a 3 bedroom condo yielded.
But, the purchase price was $25,000 less!
So all you Bronzeville Chicago condo investors out there, I just revealed something quite valuable. You will get a better return on your investment by purchasing two bedroom condos instead of three bedroom condos.

But, back to my analysis.
————————————————————–
Here are our key metrics for our 2bed/2bath investment condo:

Net Operating Income: $7,324
Cap Rate: 17.4%
Years to Break even: 5.73
Monthly Cash Flow: $610.33
NOI/square foot: $7.71
Price per square foot: $44.21

Look at the yields for our 2bed/2bath investment condo.
At a cap rate of 17.4%, this is an outstanding investment.
This condo will pay for itself in less than 6 years.

CONCLUSION:

Investing in condo rentals can be very profitable.
Our 3bed/2bath purchase gave us a respectable yield of 11.5%.
Our 2bed/2bath purchase knocked it out the park with a yield of 17.4%.
Imagine if you added 5 of these condos to your portfolio.
You would have a net monthly cash flow of about $3,000
(assuming you paid cash). Not bad at all!

Remember, I can offer you a turn key solution, from purchase to rental to positive cash flow!

Until the next time,

Mark Killion
Real Estate Broker
Century 21 Affiliated
5200 S. Harper Ave
Chicago, IL 60615
24 Hour Voice Mail: 312-242-1822
Send me a note!

Visit me online: www.773property.com

Bronzeville Real Estate Analysis – 2012

Until the next time,

Mark Killion
Real Estate Broker
Century 21 Affiliated
5200 S. Harper Ave
Chicago, IL 60615
24 Hour Voice Mail: 312-242-1822
Send me a note!

Visit me online: www.773property.com

This report covers transactions that closed in 2011.
It is based on data from the MRED MLS system.

Kenwood Real Estate Analysis - 2011 Chicago

As you can see, the real estate market has stabilized in Kenwood.
Sales are still strong, and the values are holding up pretty well.
Kenwood is a very unique neighborhood. It has a very rich history.
It’s housing stock includes majestic mansions that were built in
the late 1800s.

Asking prices for Kenwood real estate can range from $75,000 for a recent
foreclosure all the way up to 2 million dollars for
a Queen Anne mansion near President Obama’s home.

Rental demand is very high in the Kenwood neighborhood. AS you can see
from our report above, rental prices are relatively expensive.
So this would be a great area to purchase an investment property.

Here is a beautiful view of the downtown skyline from 39th and the Lake front.
If you lived in Kenwood, you could walk to the lake!

View of the skyline from Kenwood Chicago Lake Front

Hopefully you found this information useful. If you have any questions, please let me know.
Also, please feel free to leave me a comment. I read each comment I receive.

Until the next time,

Mark Killion
Real Estate Broker
Century 21 Affiliated
5200 S. Harper Ave
Chicago, IL 60615
24 Hour Voice Mail: 312-242-1822
Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY

Bronzeville Real Estate Sales Analysis - 2011

Hey there. I just wanted to give you an update on real estate activity
for the Bronzeville area. Looking at the numbers above, we see that
properties are still selling. Some property types are selling better
than others though.

There is also a strong demand for quality rentals in the area.
Single Family homes are in great demand right now. But selling prices
are down 19% versus the same time in the previous year. This makes sense,
because in 2010 the $8000 tax credit increased demand, which in turn,
increased selling prices.

Another reason that prices have dropped is because foreclosures and short-sales
now make up the majority of the sales. These distressed property types will
generally sell at a lower price than traditional sales. The average price per
square foot in 2011 was $60.51. This is down from $90 per square foot in 2010.

For Single Family homes, buyers can still get financing relatively easily.
Buyers can get a FHA insured loan with just a 620 middle credit score and a
small down payment of 3 ½ %. But, condos are more difficult to get financed.
You will generally need a higher credit score and a higher down payment.
Also, the condo association has to be functioning and financially sound.

As you can see above, condos are selling at very attractive prices right now.
This is because most of them will not qualify for financing. Many Bronzeville
condos are being sold as a foreclosure or a short sale. This is reflected in
the average condo selling price of only $61,748.

Bronzeville Real Estate Price Trend Chart

Single Family Home - Breakdown by Sales Type

Condo - Breakdown by Sales Type

2 to 4 Unit Building - Breakdown by Sales Type

Chicago Pending Foreclosure Analysis

Hopefully you found this information useful. If you have any questions, please let me know.
Also, please feel free to leave me a comment. I read each comment I receive.

Until the next time,

Mark Killion
Real Estate Broker
Century 21 Affiliated
5200 S. Harper Ave
Chicago, IL 60615
24 Hour Voice Mail: 312-242-1822
Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY

Many times it is useful to review a chart of data to

identify trends. I decided to create a chart of selling

prices for condos in the Hyde Park Chicago neighborhood.

This set of data spans a 3 year period.

It runs from the 4th QTR 2008 through 4th QTR 2011.

It is based on the selling prices of 2 bed/2 bath condos.

I am frequently asked: “is it a good time to buy real

estate in xyz neighborhood?” So, I decided to

write a blog about it. I will cover several neighborhoods,

but for this blog post, I will examine Hyde Park.

I prefer to analyze and present the data,

and let the market tell us if it is a good time to buy.

The chart shown above is basically a 3 month moving average

of property selling prices in Hyde Park Chicago.

This chart is based on sales data from the MRED MLS System.

Findings:

A few things jump out at me when looking at this chart.

1) Prices hit a bottom in the 4th quarter of 2010.
Average prices in that quarter were about $80,000.
I would guess that most sales in that quarter were
bank-owned foreclosures.

2) Prices are trending upward in the 4th quarter of 2011.

3) During this rough three year period, prices have actually increased.
But there has been some volatility from quarter to quarter.

Based on this chart, it appears that prices are trending upward.
Since we don’t have a crystal ball, we can only hope that prices will
continue in that direction.

Here is a bit of information that this chart doesn’t show us:

Hyde Park will be getting a make over near 53rd and Harper.
Many new amenities are coming to the area (i.e. movie theatre,
Hyatt hotel, more restaurants, etc.)

So, in my opinion, it appears to be a good time to buy a condo
in Hyde Park. Prices have not only stabilized, but they are trending up.
Please let me know if you have any questions.

Until the next time,

Mark Killion
Real Estate Broker
Century 21 Affiliated
5200 S. Harper Ave
Chicago, IL 60615
24 Hour Voice Mail: 312-242-1822
Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY

After 5 straight quarters of declining U.S. foreclosures,
the number of default notices rose in the 3rd quarter of 2011.
This could be a sign that things will be getting worse before they
start to get better.

I believe the foreclosure process slowed down late last year due
to the “robo-signing” scandal. That was the scandal where it was
discovered that banks were foreclosing on homeowners without reading
all of the facts.

Now that banks have a process in place to deal with foreclosures, I would
expect the number of foreclosures to continue to rise in the short term.

Here in Illinois, there was a spike in Bank Owned Properties (aka REO).
The number of REO sales in Illinois was up 27% in the 3rd quarter.
Other states that had increased REO sales included Georgia (42%)
and Massachusetts (62%).

The entire foreclosure process in Illinois still takes about a year to complete.
In some cases, it can take a lot longer.

When will it end?

Well, it appears that this real estate slump or market correction will
continue for several years. The slump is already close to its 5th Birthday.
It looks like this financial malaise will drag on for another few years.
As long as the unemployment rate remains historically high, I think
the real estate market will remain flat until 2015.

Also, it is estimated that 1 out of every 3 homeowners is underwater.
“Underwater” is a nice way of saying that an owner owes more than the
home is worth. For example, an owner might have a $200,000 mortgage,
but the home is only worth $115,000. So in this example, the home is
underwater by $85,000. Unless banks start doing more loan modifications
where they reduce the principal balance, today’s underwater homes will
be tomorrow’s foreclosed homes.

What does this all mean?

So, if you are thinking about selling, now is as good a time as any.
I don’t think the market will get any better any time soon.
If you are thinking about buying, please do your homework.

Look at the neighborhood trends and determine which neighborhoods
have the most stable property values. I would recommend buying a
single family home. Buyers can still get FHA financing for single family
homes. So their selling prices have been relatively stable.

Since mortgage rates are at record lows, it is still a good time to buy.
You just have to do your homework. I would suggest working with a Realtor
that has experience in your neighborhood of choice.

What can I do if I am facing foreclosure?

There is a FREE hotline available to assist owners that are facing foreclosure.
The phone number is 888-995-HOPE. Please visit the HOPE website for more info:

http://www.995hope.org/

Until the next time,

Mark Killion
Real Estate Broker
Century 21 Affiliated
5200 S. Harper Ave
Chicago, IL 60615
24 Hour Voice Mail: 312-242-1822
Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY

Let’s take a look at the popular Beverly neighborhood in Chicago, IL.
This report is based on sales transactions that closed during the
3 month period ending OCT 31st 2010.
This information is based on data from the MRED MLS system.

If you are thinking about buying or selling in Beverly,
this should give you a good idea of the current market values.
Hopefully, it might also encourage you to contact me for assistance

SINGLE FAMILY HOMES

29 Homes were sold. The average selling price was about $268,000.
The average market time was 136 days.
The properties were sold for about 95% of their asking price.

CONDOS

2 Condos were sold. The average selling price was about $102,000.
The average market time was 58 days.

Two to Four Units

One multi-unit property was sold for $440,000.
It took 53 days to sell.

Multi-Family (5+ Units)

No multi-family properties were sold.

Rentals

There wasn’t much rental activity in these 3 months.
There were a total of four properties rented during this time.
3 of those properties were single family homes.
The median rent was $1,975.

Here’s a map of the Beverly neighborhood in Chicago:

ZIP Codes Parts of 60620, 60643, 60655
Median income $66,823

Until the next time,

Mark Killion
Real Estate Broker
Century 21 Affiliated
5200 S. Harper Ave
Chicago, IL 60615
24 Hour Voice Mail: 312-242-1822
Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY

This report is based on sales data from the MLS for JAN-01-2010 through JUL-20-2010.
This is for zip code 60653 only. This zip code includes a few different neighborhoods.
It includes Bronzeville, Oakland, and the north half of Kenwood.

You will notice that there is a wide range of selling prices. This is because foreclosures
are still hitting the market at very low prices. But, at the same time, high end properties
are still selling. Sales prices are mostly determined by the condition of the property.
On the low end, you will have the foreclosures that require a total gut rehab.

On the high end, you will have the recently rehabbed properties and/or newer construction.
The average property will be somewhere in between. It will usually be in fair condition,
but it has not been updated or remodeled in several years.

So looking at the present market, and its wide range of prices, one may conclude that there
is a great opportunity to buy a bank owned property at a very low price, do a high-end
rehab, and put it back on the market a few months later for a much higher price.

Many investors have realized this opportunity and the demand for bank owned properties is high.
It is not uncommon for those properties to sell for 25% to 50% OVER asking price.

==============================================================================
SINGLE FAMILY HOMES

Overall: 31 Single Family Homes were sold in zip code 60653.
Prices ranged from $30,000 to $445,000. The average
selling price was $192,000

3 Bedrooms: 11 sold ranging from 60,000 to 415,000
Average selling price: $193,000

4 Bedrooms: 12 sold ranging from 30,000 to 445,000
Average selling price: $190,000

5 Bedrooms: 5 sold ranging from 65,000 to 430,000
Average selling price: $225,800

6 Bedrooms: 6 sold ranging from $41,000 to $301,000
Average selling price: $138,000

CONDOS:

Overall: 96 condos were sold in zip code 60653. Prices ranged from $2,000 to $329,000.
The average selling price was $97,000.

Studio: 1 sold for $33,000

1 Bedroom: 1 sold for $170,000

2 Bedrooms: 30 sold for prices ranging from $5,000 to $250,000
Average selling price: $79,000

3 Bedrooms: 54 sold for prices ranging from $2,000 to $329,000
Average selling price: $104,000

4 Bedrooms: 8 sold for prices ranging from $16,000 to $255,000
Average selling price: $91,000

5 Bedrooms: 8 sold for prices ranging from $179,740 to $250,000
Average selling price: $214,870
=================================================================
MULTI-UNITS (Two to Four Units):

Overall: 27 multi-unit properties were sold in zip code 60653.
Prices ranged from $25,000 to $420,000.
The average selling price was $106,000.

Two Flats: 14 sold for prices ranging from $25,000 to $156,000.
Average selling price: $79,000

Three Flats: 13 sold for prices ranging from $29,000 to $420,000.
Average selling price: $105,000

Four Flats: 0 sold so far this year.

==================================================================
MULTI-FAMILY (5 or more units)

6 Flats: 4 sold for prices ranging from $120,000 to $750,000.
Average selling price: $409,000

Note: Financing for commercial properties is a lot harder to come by these days.
Many commercial lenders are asking for a 25% to 30% down payment.
And most lenders are not allowing sellers to “hold paper”
(finance part of the sale by holding a secondary mortgage).

As a result, sales for multi-family properties are currently depressed.
For this multi-family analysis, I had to look at a couple of nearby areas in
addition to zip code 60653 (i.e. Hyde Park, Washington Park).

However, there are still investors in the market looking for high yield opportunities.
If you have a multi-family property, and it is currently rented and generating
positive cash flow, you definitely have a chance to sale your property.

You just have to offer it at a price point that allows a high return on investment
for the next owner. This doesn’t mean you have to give your property away.
It just means that investors that can buy right now are looking for a high return
on their investment.
Here’s a rough estimate of where you need to be right now with pricing in 60653:

Multiply your annual rental income times 6.5

For example: let’s say you have a 6 Flat and you are getting $1,000 per month
for each unit. Your monthly gross income would be $6,000 and your annual
gross income would be $72,000
6.5 x $72,000 = $468,000

$468,000 would be your estimated marketing price when you put your building on
the market.

This would be for a property that is currently generating income. If your property is
vacant, you will have to sell it for much less. (probably around $320,000)

Many of the six flats that did NOT sell this year had an average price of about $550,000.

=========================================================================
LAND:
Similar to multi-family commercial properties, the demand for land is currently depressed.
This is because land sales and new construction go hand in hand. Since there aren’t many
construction loans available right now, there is no need for developers to purchase land.

However, you will always have a few investors looking for good deals on land in desirable locations.
Two lots were sold this year. One was a standard residential lot. It sold for about $65,000.
The other lot was a much larger commercial lot and it sold for about $390,000.
===========================================================================
RENTALS:

The rental market in Bronzeville and zip code 60653 is booming! Over 400 units have been rented
so far this year. Here’s a summary of average rental prices:

1 Bedroom: $900
2 Bedrooms: $1,200
3 Bedrooms: $1,600
4 Bedrooms: $1,900
5 Bedrooms: $2,600
============================================================================
If you would like a personalized market analysis for your property, please let me know.
I would be more than happy to prepare a FREE report for you. If you have
any questions about the Bronzeville Real Estate market, please call me at
773-469-4943. You may also send an e-mail to: mark@markkillion.com
And as always, if you know anyone that needs to buy, sell, or rent real
estate, please let me know. Your friends and family deserve exceptional
customer service. I am here to serve you!

Until the next time,

Mark Killion
Real Estate Broker
Century 21 Affiliated
5200 S. Harper Ave
Chicago, IL 60615
24 Hour Voice Mail: 312-242-1822
Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY

I decided to analyze Chicago Rental prices for
the 2nd quarter of 2010. This analysis shows
the average rent price by neighborhood and
bedroom count.

This report can be very useful for both
investors and tenants. I also provide assistance
to both groups. I can help investors buy
and sell investment properties. I can also
help tenants lease quality condos and homes.

Click Here For Report

If you have any questions, please feel free to
leave a comment or visit my website:

Bronzeville Real Estate

Until the next time,

Mark Killion
Real Estate Broker
Century 21 Affiliated
5200 S. Harper Ave
Chicago, IL 60615
24 Hour Voice Mail: 312-242-1822
Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY

In many areas of the city, the number of properties
sold is trending up while the selling price is
trending down. So demand is being driven by
increased affordability and the tax credit.

Also, investors are back in the market snatching up
deeply discounted bank owned properties. The
distressed property sales are pulling down Chicago’s
median value. There are properties on the South
and West Sides selling for $20,000! But, I think
that certain areas, like the South Loop and the Near
North side, are stabilizing. Sales activity in those areas
is high, but there is also a lot of inventory on the market.

Hopefully, when the tax credit expires, consumer
confidence will be higher than it is currently. The
timing is good, because it expires during the busy
Spring selling season. So right when it expires,
seasonal demand will be picking up.

I think we hit bottom around July/August 2009.
There is a lot of pent-up demand out there. But there
is even more uncertainty. The main concern now is
job creation. But, I think overall that 2010 will be a better
year than 2009.

Until the next time,

Mark Killion
Real Estate Broker
Century 21 Affiliated
5200 S. Harper Ave
Chicago, IL 60615
24 Hour Voice Mail: 312-242-1822
Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY