You know the Bronzeville real estate market is turning around when
you start seeing new construction. There are new buildings going
up on 48th and Indiana and 48th and King Drive.
This is definitely a great sign for the Bronzeville Real Estate Market!
New Construction in Bronzeville
< Until the next time, Mark Killion Kale Realty 542 W. Roosevelt Rd. Chicago, IL 60607 24 Hour Voice Mail: 312-242-1822 Send me a note!
Visit me online: www.773property.com
Downtown Chicago
A Home Path property is a bank owned property that is currently
owned by Fannie Mae. These properties have already went through the
foreclosure process. Now they are back on the market for sale.
In some Chicago neighborhoods, the Home Path properties are a significant
portion of the local real estate market.
But, I am starting to feel like getting a Home Path offer accepted is
like winning the lottery. I have submitted several offers for various
clients over the last few years. Guess how many offers were accepted?
ZERO!
And to make matters worse, you have to complete twice as much paperwork for
a Home Path offer. So it is pretty disappointing when you get the email
that says “we have received multiple offers…blah blah blah”.
So I decided to analyze the asking price vs. selling price for Fannie Mae properties.
This analysis is based on Fannie Mae properties that were sold in Chicago for
the three month period ending March 23, 2013.
During this 3 month period, 427 properties were sold.
The selling prices ranged from $2,900 all the way up to $429,000.
Here is the biggest revelation:
The median accepted offer was 99% of asking price.
So basically the average accepted offer was an offer for full asking price.
Almost half of all accepted offers were MORE THAN ASKING PRICE!
So, this is the problem. Many buyers are conditioned to offer less than asking price.
Well apparently that strategy is not going to work with Fannie Mae.
The real estate market has changed. It is not 2009 anymore. There are multiple buyers
out there and the competition for properties is really picking up.
So, in conclusion, if you are placing an offer on a property owned by Fannie Mae,
be prepared for multiple offers. And if you want to have a chance, offer asking price!
And if you really want the property, offer a couple grand over asking price.
Until the next time,
Mark Killion
Kale Realty
542 W. Roosevelt Rd.
Chicago, IL 60607
24 Hour Voice Mail: 312-242-1822
Send me a note!
Visit me online: www.773property.com
Downtown Chicago Condo Rentals
Hello to all my blog readers out there.
I wanted to take a quick look at rental activity
in the West Loop.
This analysis is based on properties that were rented
from JAN 1st 2013 through MAR 20 2013 in the West Loop
Chicago neighborhood.
This year we had 93 units rented through March 20th.
Last year we had 108 units rented through March 20th.
So the total number of units rented has decreased by 16%.
However, the median rental price this year was $2,125.
Last year, the median rental price was $2,000.
This represents a rental increase of 6.25%.
Here is the median rental price breakdown by unit size:
Studio = $1,300
1 bedroom = $1,752
2 bedroom = $2,558
3+ bedroom = $3,643
For this analysis, I considered the West Loop to run
from 400 West to 1600 West and 700 South to 500 North.
If you are thinking about renting a condo in the West Loop
neighborhood, this analysis should give you a good idea
of current market values.
If you need assistance with renting a condo, please send
an e-mail to mark@markkillion.com
I help owners and tenants!
Until the next time,
Mark Killion
RE/MAX Premier Properties
1205 N Dearborn
Chicago, IL 60610
Visit me online: www.773property.com
EQUAL HOUSING OPPORTUNITY
Newport Condos - Kenwood Chicago
Financing a condo can be tricky.
Here are some important questions to ask the listing
broker BEFORE you submit an offer on a condo:
1. How many units in the building are rented out?
Most lenders require that at least 51% of the units be owner occupied.
So if there are a lot of rentals in the building, it will be hard to finance.
2. Are there rental restrictions?
Many associations are starting to restrict rentals. So if you are planning
on buying a condo as an investment property, be sure to check if rentals
are allowed in the building. If there are restrictions, you might be required
to complete an owner-occupant addendum which states that you intend to use
the property as your primary residence.
3. How much does the association have in reserves?
It is important that the association have adequate funds in reserve to
pay for future repairs. If the association is underfunded, lenders will
be hesitant to finance a condo there. Also, if the association is underfunded,
they are likely to hit you with a special assessment in the near future.
4. What special assessments have been mandated in the past five years?
Occasional special assessments are often unavoidable. But frequent special
assessments probably indicate that the property is being mismanaged, or the association is
underfunded.
5. Is the condo building in litigation?
If the association is facing a pending court case, or is currently in litigation,
start looking for another condo to buy.
6. Are more than 10% of the units owned by a single entity?
If several units are owned by the same person, the lender will view this as
being risky. For instance, if a developer hits hard times, multiple units can
go into foreclosure simultaneously. The property value of the remaining condos
in the building will probably decrease significantly as a result.
7) Have there been any recent sales in this building? And did they involve financing?
If a condo has been sold in the last 6 months, and it was financed,
then you are probably in good shape. If all the recent transactions were
cash deals, then this might indicate that the building didn’t qualify
for financing.
8) Do you have FHA financing?
Most condos and condo buildings will not qualify for FHA financing.
I estimate that for every 100 condos on the market, only 5 of them will
qualify for FHA financing.
So if you are shopping for a condo, you should line up conventional financing
instead of FHA financing.
Conventional financing will require higher credit scores and a higher down payment.
Most lenders would like you to have at least a 680 credit score and a 10%
down payment to go with it.
9) How many units are behind on their assessments?
If several owners are behind on their assessments, this could be a red flag.
If the owners are not paying their assessments, they are probably in financial
distress. It will only be a matter of time before they stop paying their
mortgage. If several owners are behind on their assessments, most lenders will
not finance a condo in the building.
10) How many short-sales and foreclosures are on the market in this building?
If there are other condos in this building on the market, are they distressed sales?
If so, it could mean trouble. Lenders only want to finance condos in stable buildings.
If more than a couple of units are in some stage of foreclosure, then you should probably
find a condo somewhere else.
As you can see, financing a condo can be tricky. It is now more important than ever
to work with an experienced real estate agent that understands the complexity of condo financing.
Otherwise, you may waste a lot of time viewing condos that won’t qualify for financing.
Until the next time,
Mark Killion
RE/MAX Premier Properties
1205 N Dearborn
Chicago, IL 60610
Visit me online: www.773property.com
EQUAL HOUSING OPPORTUNITY
2012 Chicago Rent Price Analysis
2012 Chicago Rent Price Analysis
The above analysis should be useful for tenants and investors alike!
Where else can you get good rental data like this? 
I created a database just so I could analyze over 10,000 rental transactions
for this post and give it to all my blog readers out there!
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
Chicago Multi-Family Property – 3500 S. Artesian
Hello to all my blog readers out there. Today I want to take a look at a
Chicago Multi-Family property that is currently on the market. This
property is near 35th and Western. It is listed by David Padgurskis, Showtime Realty.
I think that this property would make a nice addition to your portfolio.
But, we won’t know for sure until we run the numbers.
This 21 unit property is listed at $649,000. Each unit has 2 bedrooms and 1 bathroom.
It has been on the market for almost 9 months. The gross scheduled income is $126,600.
Let’s take a look at our key metrics:
Asking Price: $649,000
Gross Rent Income (GRI): $126,600
Gross Rent Multiplier (GRM): 5.13
Net Operating Income (NOI): $77,056
Cap Rate: 11.87%
Number of Units: 21
Price per unit: $30,905
Price per square foot: $30.23
Year Built: 1910
Expenses
Taxes________________________$9,335
Repairs (7.5%)__________________$9,495
Vacancy and Collections (5%)________$6,330
Insurance_____________________$5,233
Electricity_____________________$1,183
Scavenger_____________________$1,367
Water________________________$6,071
Landscaping & Snow Removal_______$1,800
Property Management (5%)________$6,330
Pest Control___________________$1,200
Advertising______________________$600
Miscellaneous_____________________$600
=======================================
Total Expenses: $49,544
Based on my estimates, the expenses are running
at about 39% of gross rental income or $49,544.
This will give us a net operating income of $77,056.
When we divide the Net Operating Income by the asking price of $649,000,
we find that we have a cap rate of 11.87%.
If we adjust the purchase price down to an even $640,000 we have an
attractive cap rate of 12%!
As you can see, the purchase price and the cap rate are inversely related.
If you want a higher cap rate, then you need to offer less for the property.
After you purchase the property, if you want to increase the cap rate, then
you need to increase the Net Operating Income. This can be done by
raising the rents, increasing non-rental income (i.e. vending machines, coin laundry, etc.),
or by reducing the expenses (improve collections, fix leaky faucets, etc.).
Another thing that makes this deal look interesting is that the owner is willing
to “hold paper”. So you might be able to get this one financed with only 15% down.
This will definitely increase your cash-on-cash returns.
So at a 12% cap rate, I definitely think this property warrants further investigation.
As a buyer’s broker, I can assist you with purchasing this property or any
other multi-family property that is listed on the Chicago MLS. I am licensed to sell
real estate in the state of Illinois. Just send me your search parameters and I can
send you properties that meet your acquisition criteria.
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
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
SINGLE FAMILY SALES ANALYSIS
In 2012, the median selling price in Beverly was $233,750.
In 2011, the median selling price in Beverly was $225,000.
So, Beverly home values appreciated by 3.89% in 2012.
The number of homes that were sold also increased by 7.59% in 2012.
In 2011, 158 homes were sold in Beverly Chicago.
This number increased to 170 homes in 2012.
So, things are definitely headed in the right direction.
The average home in Beverly Chicago took about 5 months to sell. The rate of sales in Beverly is about 14 homes per month.
As of Jan 8, 2013 there are 90 homes available for sale.
So, there is about 6.5 months of inventory on the market in Beverly.
A 6 month supply signals a healthy and balanced market.
To put this in perspective, in 2009, many Chicago areas had
over 18 months of inventory.
DISTRESSED SALES
Distressed sales accounted for nearly 25% of Beverly’s real estate transactions in 2012.
Here is the breakdown by sales type:
Court Approval 2%
Foreclosure 16%
Short Sale 6%
Traditional 76%
AVERAGE PRICE PER SQUARE FOOT
The average price per square foot was $137.50 in 2012.
So if you were thinking about putting a 2,000 square foot home on the market in Beverly,
its estimated selling price would be about $275,000.
If you have any questions regarding the Beverly Chicago
Real Estate market, please send an e-mail to mark@markkillion.com
Beverly Homeowners: I am offering a free property analysis!
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
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
