Category: Loft Buyers
Thinking of buying a “Raw” Chicago Loft?
Posted by michaelhulett in Loft Buyers Monday, 31 January 2011 19:55 No Comments
We get a lot of calls about purchasing “raw” loft space. We truly wish there were more of these spaces available as we love them too. Many people are disappointed to find that they are so tough to find. There are TWO primary reasons why:
- Most of the lofts in Chicago were built in the last 15 years. The trend year after year was to continue to make the spaces smaller, more well appointed, and lets squeeze in an additional bedroom as well. The reason – people paid more for the end product.
- The Chicago lofts that were done 15+ years ago are much fewer in numbers. Those older loft buildings often had much larger floor plans and few bedrooms. The result = lofts you see in the movies. When we come across those same buildings now we often find that someone has already “tampered” with the floor plan. Added walls, bedrooms, etc. They are no longer the open vistas of old.
The best place to find these older loft conversions is in neighborhoods such as Printers Row, Bucktown, and the West Loop. Outside of that the pickings get thin. Another great way to go is to find a stand alone commercial building that could be suitable to your needs. There are a few key factors that come into play for this option. First of all they are often more expensive. Additionally, it must be zoned accordingly in order for you to actually live there. A call into the zoning department can verify this. Mixed use buildings are a great option. That’s what you see as a typical retail store on the first level, then apartments upstairs. They come in all shapes, sizes, and locations. The other key factor to remember when purchasing a property with any commercial component is that the loan terms change. That means higher percentage down (typically 20%+), higher interest rates, and less favorable terms in general. With that said, there are some great SBA loan programs that can get you in for as little as 10% down. All in all, our advice is the same it is with any other property type – really work through your Needs and Wants list prior to starting your search. If you know exactly what you need, you’re halfway to finding the perfect lofty Chicago abode. Live Lofty.
THREE recent changes to buying distressed properties
Posted by michaelhulett in Loft Buyers Wednesday, 12 January 2011 09:38 No Comments
The market has changed in a few keys ways over the past 6-9 months when it comes to buying distressed properties. Here are the key factors you need to know about:
- Listing agents are getting more savvy on how to list and sell short sales. As of a year ago, very few agents had experience listing short sales. This process is very different than a “traditional” listing. This opens up fantastic new opportunities for buyers. Many buyers would steer clear of short sales in the past due to the many unknowns, in particular the time frame. Now with the progression of experienced agents, attorneys, and negotiators - there are some excellent short sale deals that can often be closed in as few as 60 days or less.
- If you’re shopping for distressed properties, be prepared for multiple offers. Yes – it’s not only happening, but extremely common. Since the supply and demand balance is still out of place, there are still less buyers than properties. Since buyers in this market expect a great deal, it’s obvious to see whay they flock to properties that are priced aggressively. Many buyers instincts are to walk away given that it’s such a clear cut buyers market. I strongly recommend against it. An experienced agent (aghh-humm… LoftHunt peeps!) can guide you through the process to make sure you not only secure the property, but at the best terms possible.
- It’s more important than ever to get a strong pre-approval from a reputable lending organization. If you’re paying cash – you had best have documentation prepared ahead of time. In regards to the source of your pre-approval, it doesnt have to be a Chase or Wells Fargo. In fact to be honest, some agents are slightly put off by larger banks that have a reputation for slow moving loan departments. Local and regional mortgage banks like Wintrust or Chicago Bancorp have excellent repiutations in the brokerage community. What’s also becoming more popular with distressed sales in particular is the listing agent requiring the buyer to get pre-approved thorugh a preferred lender of their choice. If you run into this - you had better do it or you run the risk of not being competitive. Now don’t misunderstand what I’m saying here - no one can make you use their lender. The reason they are requiring a pre-approval from their preferred lender is that they really want to know (from someone they trust) if you can truly afford the place or not.
In short, the market for distressed properties is becoming very competitive. If you’re holding on to last years mentality “I am the buyer and they need me so I’ll proceed as I choose”, we’ll then you just might miss the boat. If you embrace the changes to the market and have the approriate expectations going into your search, then you’re one step closer to gettting a great deal. Cheers!
Tips on buying distressed properties
Posted by michaelhulett in Loft Buyers Monday, 13 December 2010 13:28 No Comments
Distressed properties can be a great deal for a buyer. These transactions however often take a very different path than traditional home sales. For starters there are 2 primary types of distressed properties prevelent in today’s market: short sale and foreclosures/REO. In simple terms, a short sale is when a property owner owes more on a property than what it’s worth. If they can no longer afford to maintain the property, then asking the bank to “sell short” is sometimes the best option. That means that the bank is accepting a payoff that is less than what is owed on the property. A foreclosure/REO on the other hand is essentially a property that has already gone back to the bank. The bank controls the property at this point hence the term REO- real estate owned. Without getting into the multiple variations that each transaction can offer, we’ll cover the basics here:
SHORT SALES
Ket Points:
- Make sure an experienced negotiator is involved. This can not only expedite the process but they often make or break whether or not the deal will even get done.
- The seller is still in control of the transaction. It seems odd, but its true. Both the bank and the seller will need to agree on mutually beneficial terms.
- Banks will not begin the short sale process until there is a written contract on the property. Verbal offers are not considered.
Questions to Ask?
- Does the listing agent have short sale experience? Many agents are not familair with the process. An un-informed listing agent can cause significant delays.
- Is there a second mortgage or additional liens on the property? If so, make sure the negotiator is securing that payoff as well. It’s sometimes the case that a buyer (yes – I said buyer) will need to bring a “cash contribution” to closing to satisfy additional liens.
- Has a foreclosure date been set? If so, you had better be able to realistically get the deal closed prior to that date. Otherwise, back to the bank it goes. That could mean it would be months again before any new information would be available.
FORECLOSURES
Key Points:
- These are bank owned and controlled. Most banks are not in the business of holding real estate. Nor do they want to be.
- Nearly every sale is AS-IS condition. This still means you can do a home inspection. You’re just not getting a seller concession from items that are found to be defective.
- Even in today’s market, many have multiple offers. Be prepared to do what the listing agent asks of you. If the bank wants you to get pre-approved with their lender, then do so. This doesn’t mean that you have to use them, they just want to make sure a buyer is qualified.
Questions to Ask?
- Has their been any property damage subsequent to the bank taking control of the property? While most listing agents will not have much along the lines of a property history, they will often know what the case has been since th bank took control.
- Ask your lender if the property can be financed? Homes with signicant damage can not be financed traditionally.
- What is the banks timeframe on responding to an offer? This can often take some time so be prepared for a slow moving process.
All in all these types of transactions can be beneficial for buyers. You wont get the legal disclosures associated with a traditional sale; you’ll have to be flexible on your closing date as the process can take some time; and there’s a chance you’ll have to do some work since these properties come AS-IS. With that said, buyers that fit the mold can find a great deal!
Buyers perfect storm?
Posted by michaelhulett in Loft Buyers Friday, 15 October 2010 13:26 No Comments
Please check out this re-posted article from the WSJ below. It’s just a few points on why it’s such a strong time to buy.
This article aside, the interest rates alone are a very serious reason to consider purchasing right now. While rates are predicted to stay low for a few months, there are no guarantees. We are looking at 30yr rates close to 4%. This is an ALL-TIME low. It drops the payment significantly! It also helps that inventory levels are still high and that prices are at near 10 year lows. My personal favorite reason is that most sellers know that if their place is not under contract by Thanksgiving, that they are likely looking at a spring 2011 sale. That really puts the buyer in the driver seat when it comes to negotiating! Some would say the perfect storm in which to purchase:)
As always, please call me if I can be of assistance at anytime, (773)744-4447. -Mike Hulett
WALL STREET JOURNAL – ONLINE EDITION
- SEPTEMBER 16, 2010, 7:13 A.M. ET
- By Brett Arends
ENOUGH WITH THE DOOM AND GLOOM ABOUT HOMEOWNERSHIP! Brett Arends explains why owning a home is a good thing.
So here are 10 reasons why it’s good to buy a home.
1. You can get a good deal. Especially if you play hardball. This is a buyer’s market. Most of the other buyers have now vanished, as the tax credits on purchases have just expired. We’re four to five years into the biggest housing bust in modern history. And prices have come down a long way– about 30% from their peak, according to Standard & Poor’s Case-Shiller Index, which tracks home prices in 20 big cities. Will prices fall further? Sure, they could. You’ll never catch the bottom. It doesn’t really matter so much in the long haul.
2. Mortgages are cheap. These are the lowest rates on record. As recently as two years ago they were about 6.3%. If inflation picks up, you won’t see these mortgage rates again in your lifetime. And if we get deflation, and rates fall further, you can refinance.
3. You’ll save on taxes. You can deduct the mortgage interest from your income taxes. You can deduct your real estate taxes. And you’ll get a tax break on capital gains–if any–when you sell. Sure, you’ll need to do your math. You’ll only get the income tax break if you itemize your deductions, and many people may be better off taking the standard deduction instead. The breaks are more valuable the more you earn, and the bigger your mortgage. But many people will find that these tax breaks mean owning costs them less, often a lot less, than renting.
4. It’ll be yours. You can have the kitchen and bathrooms you want. You can move the walls, build an extension–zoning permitted–or paint everything bright orange. Few landlords are so indulgent; for renters, these types of changes are often impossible. You’ll feel better about your own place if you own it than if you rent.
5. You’ll get a better home. In many parts of the country it can be really hard to find a good rental. All the best places are sold as condos. Money talks. Once again, this is a case by case issue: In Miami right now there are so many vacant luxury condos that owners will rent them out for a fraction of the cost of owning. But few places are so favored. Generally speaking, if you want the best home in the best neighborhood, you’re better off buying.
6. It offers some inflation protection. No, it’s not perfect. But studies by Professor Karl “Chip” Case (of Case-Shiller), and others, suggest that over the long-term housing has tended to beat inflation by a couple of percentage points a year. That’s valuable inflation insurance, especially if you’re young and raising a family and thinking about the next 30 or 40 years. In the recent past, inflation-protected government bonds, or TIPS, offered an easier form of inflation insurance. But yields there have plummeted of late. That also makes homeownership look a little better by contrast.
7. It’s risk capital. No, your home isn’t the stock market and you shouldn’t view it as the way to get rich. But if the economy does surprise us all and start booming, sooner or later real estate prices will head up again, too. One lesson from the last few years is that stocks are incredibly hard for most normal people to own in large quantities–for practical as well as psychological reasons. Equity in a home is another way of linking part of your portfolio to the long-term growth of the economy–if it happens–and still managing to sleep at night.
8. It’s forced savings. If you can rent an apartment for $2,000 month instead of buying one for $2,400 a month, renting may make sense. But will you save that $400 for your future? A lot of people won’t. Most, I dare say. Once again, you have to do your math, but the part of your mortgage payment that goes to principal repayment isn’t a cost. You’re just paying yourself by building equity. As a forced monthly saving, it’s a good discipline.
9. There is a lot to choose from. There is a glut of homes in most of the country. The National Association of Realtors puts the current inventory at around 4 million homes. That’s below last year’s peak, but well above typical levels, and enough for about a year’s worth of sales. More keeping coming onto the market, too, as the banks slowly unload their inventory of unsold properties. That means great choice, as well as great prices.
10. Sooner or later, the market will clear. Demand and supply will meet. The population is forecast to grow by more than 100 million people over the next 40 years. That means maybe 40 million new households looking for homes. Meanwhile, this housing glut will work itself out.
Year to date sales up over 37% in Cook County
Posted by michaelhulett in Loft Buyers, Loft Sellers Thursday, 29 July 2010 10:07 No Comments
