Home Buying in Ravenswood>Question Details

Peter, Home Buyer in Chicago, IL

I am looking to buy a 2 flat building in the North Ravenswood area with the hope of rehabbing it and

Asked by Peter, Chicago, IL Fri Nov 2, 2007

converting the individual units and selling them as condos. This would be my first experience doing so. Any advise on whether it is better to buy the building and rent out the flats or then go the rehab route given the current market? The building is well priced but not way under market value.

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Lynn911.com Dallas Realtor’s answer
Are you a general contractor? Do you understand all the particulars involved to rehab any property ? If answer is NO best gain a full understanding PRIOR to a project turning into a disaster

I am a general contractor been doing this for yearssssssssssssssssss... everyone thinks it is easy ')

You also need confer with city with your plan they may not allow you divide up the building sell as condos

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
0 votes Thank Flag Link Thu Jan 27, 2011
Stop. This is a stupid idea. It was a stupid idea in the boom and it is an even dumber idea now. During the boom those who did this kind of project luckily had enough koolaid drinking buyers around to make some money. The buyers and banks aren't drinking the koolaid anymore.
This whole notion that 2 flats are great investments that has been put out by various sources is nothing but marketing hype. 2 flats can be a good investment as a long term owner occupied investment, not as a Condo flip.
2 flats have served a very traditional role in Chicago for decades. Person buys it, lives in one unit, rents out the other unit, when the owner retires rental income helps pay the bills during old age. They are also a great way for 1st time buyers to get into a building when they can't quite afford a single family.
There are tons of Condo's available for buyers to choose from. Why would a buyer want to buy into a 2 flat when they can buy into a larger building with amenities. If you can't give a plausible answer for that, then its pretty much over. It will also be difficult for a buyer to get financing.
Having been a property manager for years, I can tell you that one doesn't make money on a 2 flat during ownership. One can make a good return on investment during resale. The mortgage, taxes and various bills tend to eat up pretty much all the rental income.
The market is saturated with Condo's and more foreclosure condo's are coming into the market. You want to get into the game, great, but don't destroy your opportunity by trying to do a condo deal.
Web Reference: http://www.aic-chicago.com
1 vote Thank Flag Link Thu Jan 27, 2011
Condo conversions are tricky and you will want to consult with an expert on doing this. Purchasing it as an investment property and getting rental income is an excellent long-term option. I would be more that happy to review with you the purchase options, please call me to discuss.

With warm regards,

Mary Kay Laurent
Associate Vice President of Mortgage Lending
marykay.laurent@guaranteedrate.com

http://www.guaranteedrate.com/MaryKayLaurent

o: 773.516.6859 - m: 312.403.4150 - f: 773.328.1740
0 votes Thank Flag Link Mon Oct 14, 2013
You need a very good Attorney / Architect and Contractor you TRUST!!!! Make sure you do the numbers right before getting into this!
Have you considered to buy the 2 flat and just remodel it and sell it without converting it in condos? Will be less headache for you!
0 votes Thank Flag Link Thu Oct 10, 2013
Peter,

Run the numbers and see if they work. Talk with your Real Estate agent and have them find out how much condos are selling for in the neighborhood, and compare that to how much you'd have to pay for a 2 flat with rehab.

Just glancing at what condos are selling for in the area, and what 2 flats are available, it doesn't seem like a great investment right now. Renting however in the area should be quite easy. That area is becoming more popular and modernized, and you've always got students from North Park University, which is right there, looking for apartments.

If you're looking to invest in a rehab project, I have been researching the best areas to flip homes in for the last 4 months and would love to talk to you about what I've found. Let me know. You can drop me an email at Marcin@conlonrealestate.com.

Marcin
0 votes Thank Flag Link Wed Jan 26, 2011
Hi Peter,

I think that you are looking into buying a property in a very good residencial area; I am actually selling my 1 bed wood floor Condo for 180k. It's a ready to move in, but you could up it, with newer cabinets. Good luck, whciever rout your follow!
0 votes Thank Flag Link Wed Jan 26, 2011
Hi Peter,

Good luck on your adventure - whichever way you choose.

You'll need two invaluable team members.

1. A good contractor. You will need someone who is dependable, does quality work and will work for a fair price. In Chicago, these guys are hard to find. If a contractor has all these qualities, frequently he is already overwhelmed with work. Or he has decided to buy, remodel and sell buildings for himself.

2. A good lawyer. You will need a pro to guide you through the process of setting up your corporations that will be the entities that own your buildings. You will also need someone who can create the documents for your condominium associations.

Optional Team Member #3 A good tax accountant. For the following reason...

You should examine the distinct differences between buying and selling real estate short-term versus long-term. If you truly wish to become a real estate developer you need to be aware of the tax consequences for selling real estate for a profit in a short period of time.

One of the strongest benefits of owning real estate is that if you hold it long enough, your postpone your tax liabilities. And if you hold it long enough, your long-term gains are considerably lower than short-term gains. If you buy and hold - you'll be building wealth over the long term.

Plus, buying and holding pretty makes the process a no-brainer. If you hold onto real estate for 5 years, 10 years or even longer, it's nearly a certainty that your property will have appreciated dramatically. This is not always the case for properties you intend to sell quickly.

A good real estate agent *wink* should be able to connect you with competent vendors in all the areas I mentioned above. Other resources available include Angie's List website, the Building Owners and Managers' Association here in Chicago (BOMA) and talking to contractors you see working in your neighborhood.
0 votes Thank Flag Link Fri Nov 2, 2007
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