The Chicago Spire is now offering the "Investor Package"...is this another American Invesco fiasco?

So according to Crains this morning "The world's tallest residential tower is turning into rent-a-spire." You mean to tell me our new luxurious building, The Spire, is renting out units. Well, not quite.

To help move pre-construction sales along, The Spire is offering to rent out the high-priced units at a guaranteed 7.5% return for two years. They currently have 30% of their units sold and 1/2 of those sales are to foreign investors.

"The 'investor package' is an unusual ploy for a luxury condo project, where typically speculators are discouraged and rentals restricted because buyers balk at paying top dollar to live in a building with lots of short-term residents. Mr. Kelleher's Shelbourne Development Group Inc. is actively marketing the program overseas, where more stringent U.S. securities regulations do not apply", says Crains.

Here's my concern, this is very similar to the package offered by American Invesco in 2004 when marketing the condo conversions in 440 N Wabash and 345 N Lasalle. And now years later we have an abundance of foreclosures and short sales on our hands. Speculators were purchasing multiple units thinking they could sell these units before the two year period had expired and make a pretty penny. Well, what happened was that the market went south, prices dropped, and these owners couldn't afford their properties with taxes and assessments.

Because The Spire is such a high-end building and most of these investors are foreign investors getting a great deal because of the currency exchange rate, I can't imagine that the same rate of foreclosures will occur...I guess we'll just have to wait and see.

Is the Chicago Real Estate Market at Rock Bottom?

Are we at the bottom and in sight of an up turn? That's what I want to know.

Well, I just got out of my all-company meeting where we had a very nice speaker from an appraisal reasearch firm. I'd like to share some of the facts because some are startling. All of this information is based on downtown Chicago development projects, which I know isn't all of Chicago, but it can at least give us a good sense for what's going on in our market place.

*Weekly sales in developments downtown (North Ave to McComick Place)
2005 = 115/week
2008 = 30/week

*Traffic and conversion rate (buyers interested and writing contracts)
2005 = 8%
2008 = 4%

*Speculator market has decreased dramatically and 6 development projects have been cancelled in 2008

As you can see by the stats above, 2008 is a down year for Chicago Real Estate. Now, here's the good news...

Because projects are being cancelled and the speculator market has decreased, we have a good chance of rebounding in the next couple of years with lower inventory. My prediction is that we are at rock bottom and the only way is up. By 2010 we will have much lower inventory and therefore demand should increase.

I'll also leave you with a good thought:

According to the MLS, Average Prices in 1988 and the increase in 10 years

Studio $47,500 ==> today is 7.49% higher
1 Bedroom $79,400 ==> 7.27% higher
2 Bedroom $170,400 ==> 6.16% higher
3 Bedroom $361,400 ==> 6.81% higher

Now who said prices were declining???

New Development Heading South on Clybourn...Is this Good for Residential Real Estate?

For all of you home owners that live around the North and Clybourn area, isn't it hard enough to get around on a Saturday and Sunday? Well, imagine even more retail and development south of North Ave on Clybourn.

According to Crains, "The new developments are being driven by the availability of large lots, the demolition of the nearby Cabrini-Green housing development and the success of retailers already there, such as Crate & Barrel, Home Depot and Best Buy. Retail experts estimate that shops in the corridor are ringing up about $400 in sales per square foot, a figure that rivals the best regional malls and, in the Chicago area, is second only to North Michigan Avenue's Magnificent Mile."

More retail in a designated area isn't always a bad thing...it means the demographics are present to support reatil sales, and in turn that means residential real estate is doing well in the area.

Daniel Lukas, a principal with Chicago-based Structured, says "It's a natural progression for continued retail and residential in the area...in five years, it's going to be a whole new neighborhood."

To view the map of development in a new window click here:

http://www.chicagobusiness.com/downloads/Clybourn.htm

Looking for a Deal…River North Investment Properties with Killer Views and Amenities

Now is the time where the words "short sale" and "foreclosure" are becoming common phrases when Realtors are describing the properties they're selling....they're everywhere. Don't be fooled into thinking these are all great deals, because they're not. First of all, it could take up to 3 months to get the bank to respond to your offer, no matter how strong and clean it is. Secondly, the bank wants it's asking price, which is usually the pay-off of the loan and all back taxes and unpaid assessments. With that kind of asking price, it's not a deal at all.

Keep your eye out though...there are some killer deals out there. Two buildings I've seen the most potential in are 440 N Wabash and 545 Grand Plaza. Not only do they have some great deals, which are being sold because of the investors that can't afford their taxes or assessments now that the two year grace period that American Invesco so graciously offered them is up, but these are full amenity buildings and in great locations.

Stay tuned for my next posting about how to get financing for these buildings, also a challenge...

Check out these pics of the Grand Plaza's pool deck, outdoor track, and game room...

South Loop Loft Open House in Museum Park Tower I this Saturday, June 14th, 12:00 - 3:00 PM

How would you like to wake up in the morning and look at the beautiful city you live in and the top of green trees and gardens? Well here's your next home!


You don't want to miss seeing this condo. It was the developer's unit when he built the first Museum Park Tower and you can tell that a lot of love and detail went into this condo. Not only is it hard to find a condo with two large bedrooms and a large den (can't call it a bedroom because there's no closet), plus all the upgrades you can imagine throughout the unit, but also the best tier in the building because of the direct skyline and garden view. At this price point, there's nothing like it.




Located: 125 E 13th St. #703

List Price: $399,900 plus $35,000 for garage parking

Assessments: $316 (includes heat, air, water, gas, common insurance, exercise facility, etc.)

2006 Taxes: $4896.87



Join us for our Open House Saturday, June 14Th, 12:00 - 3:00. You can see it for yourself...

Buying Chicago Real Estate? Here's how it works...

1. Decision to Buy

2. Discuss your needs with your agent and determine search parameters

3. Interview 2-3 lenders/mortgage brokers and determine realistic price range

4. Search for properties and schedule appointments

5. Find a property, analyze comparable property values, and deliver offer with initial earnest money ($1000 is given with the initial offer as a security deposit, one which you will get back at closing)

6. Negotiate and come to an agreement on terms (If you don't come to an agreement with the seller, the $1000 is returned immediately)

7. Attorney Review period begins from the acceptance date on the contract (5-7 day period where you can get out of the contract for any reason)

8. Inspection takes place to ensure the property is sound (this takes place during the 5-7 day attorney review period)

9. Negotiate terms based on inspection issues and attorney review

10. Agree on terms, end the attorney review period, and deliver the additional earnest money (this is usually 5% of purchase price which is held by the listing agent's firm as the final security deposit, which you will get back at closing and can go towards your down payment or closing costs)

11. Perform a final walkthrough of the property prior to closing to ensure the property is in the same condition (1 day prior to closing or the day of closing)

12. Closing (this is when you gain possession of the property...this takes about 2 hours, held at a title company where you sign all of your lender documentation)

13. Moving Day!

What Your Chicago Real Estate Agent Should Be Telling You...

Special assessments are every home buyer's, home owner's, and home seller's worst nightmare. It's an out of pocket expense for building repairs and/or maintenance that can't be covered by the association's reserves.

I can't tell you how many stories I've heard of buyers closing on a property and soon there after finding out that they have a special assessment to pay for a repair they weren't aware of....building needs a new roof, new windows, tuck pointing, flashing, etc. Not only did this buyer just pay a large chunk of change in closing costs, including our lovely city and cook county taxes, but this buyer has just enough money saved up to buy new furnishings for his/her new home...there's no money left to pay a special assessment.

Questions to ask when buying a condo/town home in an association:

1. Are there any projects planned on the building?
2. What are the current reserves?
3. How is the financial statement, operating costs, and is there a surplus or cushion on the financial statement?
4. Does your association have meeting minutes and can I review the last 24 months? (this is critical because if there are projects planned or in the progress, they'll be written in the meeting minutes...DON'T PURCHASE YOUR HOME WITHOUT MAKING YOUR DEAL CONTINGENT UPON YOUR APPROVAL OF THE MEETING MINUTES)
5. Are there any law suits pending on the building or builder? (if so, this could lead to come hefty special assessments...attorneys aren't cheap)
6. When were the following repaired/replaced and is there a warranty on them:

• windows
• brick tuck pointing or cement block sealed
• roof
• plumbing/risers
• electrical work
• city inspections (this a rather costly and is now required)

Penthouse Lakeview Condo - Sunday, June 8th, Open House 1:00 - 3:00

If you like sunlight and spacious living, then you'll love this condo. It's a top floor duplex-up on a quiet street with 3 private decks and nothing but relaxation. Almost 2000 square feet, 3 bedrooms and two bathrooms, plus a huge loft space. It's in impeccable condition and seller is original owner. Click this link below for more information on the property.

http://www.postlets.com/res/790425

The Truth about Chicago Investment Properties and Tenants

Most real estate agents will tell you to purchase your rental property with tenants already occupying the units. I however have a different take on this....yes, it's great to have the income from the start, and that's if they pay, but if you have a dirty or disruptive tenant, you're better off without a tenant at all. I've been through three evictions in four years and many renovations due to lousy inherited tenants and a bad choice of a tenant on my part. Especially with IL law being pro-tenant and anti-landlord, the law is not in your favor. Having income immediately after purchasing your investment is a great idea, just make sure you screen the tenants thoroughly.

A couple things you can do to screen your tenants:

- Create a required application that requests their employment info, social security numbers, bank accounts, past landlord info, income, and 3 non-related references
- Pull credit report
- Ask to look at their current residence
- Ask for 2 months worth of rent as a security deposit

Just remember, it's much more difficult to get them out than to get them in.