Chicago's Multifamily Blog

Venture that owns sites near McCormick files Chapter 11 - Chicago Real Estate Daily

2010-06-04T14:55:00.000-05:00

filing for bankruptcy is a way to temporarily halt a foreclosure...but it most cases probably a futile battle.

Venture that owns sites near McCormick files Chapter 11 - Chicago Real Estate Daily

US Shuts 7 banks in IL

2010-04-24T12:22:00.000-05:00

Yesterday was D-Day for Illinois Banks, the largest amount of bank seizures in one day. Some of the institutions that will become part of a larger bank were really great neighborhood banks. The real estate melt down has really changed the landscape of investing. In summary:

Lincoln Park Saving Bank will become Northbrook Bank & Trust, a Wintrust Bank. Broadway Bank and New Century Bank were both aquired by MB Financial. Citizens Bank & Trust was acquired by Republic Bank. Wheaton Bank will become Wheatland Bank, another Wintrust Company. The Harris Bank acquired Amcore. First Midwest of Itasca will take over deposits for Peotone Bank & Trust.

Fordham in the NFL Draft

2010-04-24T12:10:00.000-05:00

As a proud Fordham Alum I am really surprised to see Fordham University named during the NFL Draft. QB John Skelton drafted by the Arizona Cardinals in the 2010 NFL Draft. Best of Luck John!

NEW LEAD PAINT REQUIREMENTS

2010-04-22T15:15:00.001-05:00

Effective today certain paint jobs on homes or apartments built before 1978 will need to be completed by a contractor who is lead paint certified by the EPA. A link to an article in the Tribune is included.

A few things caught my attention on this :

1) I have not seen too much in the way of a public awareness campain for this measure, I have not seen much in the way of alerting contractors either.
2) This is exepcted to increase the cost of a paint job by approximately 5%
3) The liabilty is on the contractor, not the property owner

Getting a loan will be pricier

2010-04-13T11:40:00.000-05:00

This article from CNN predicts 30 yr. mortgage rates in the 6% range in 2011, but states that the fed will not let rates rise to sharply until the economy is ready. Now that it seems as if everyone knows where rates are headed, what do we need to do to prepare.

Underwater rental buildings at risk; Cook County - chicagotribune.com

2010-04-08T15:02:00.003-05:00

Underwater rental buildings at risk; Cook County - chicagotribune.com

Posted using ShareThis

I do not know why, but this number shocks me. 42% of 2-6 unit Chicago apartment building owners are underwater? If you are an owner of a property that is underwater our Property Management team can increase market value and if you are interested in making a real estate investment our agents can certainly find you a great deal. Call Root Realty if you would like to discuss how we can help.

How Much Will Mortgage Rates Rise If Fed Ends Support? - CNBC

2010-03-16T12:39:00.001-05:00

How Much Will Mortgage Rates Rise If Fed Ends Support? - CNBC

This is a very interesting article considering how it relates the to the real estate markets. It seems that the FED wil leave rates the same today, but when they stop buying mortgages we could see an increase in rates for two reason. One, there will be less demand and two they could begin re-selling the mortgages they own, thereby flooding the market and diluting any demand. The article implys that an inflationary period is coming and Root Realty is a believer that real estate is a good investment option during inflationary periods.

Foreclosure Investments

2010-02-26T13:51:00.000-06:00

Root Realty is looking for investors...If you are looking to rehab apartment buildings or invest in multifamily and mixed use property, please contact us. We have direct access to foreclosures and non-distressed assets.

Contact us today....

(773) 348-8080

http://www.rootrealty.com/

Fed Rate Increase

2010-02-11T15:07:00.001-06:00

Complex, yet interesting article from Bloomberg highlighting steps the Fed is making in order to increase interest rates for the first time since 2006.

ECHO BOOMERS

2010-01-29T12:54:00.001-06:00

ECHO BOOMERS= The children of baby boomers.

This generation is entering the prime renters age and many experts are expecting this growth in the rental population to have a strong effect on apartment building vacancy rates. This is great for owners of apartment buildings.

If you own a building why not get a free property managament quote from Root Realty.

2010 Apartment Outlook

2010-01-25T14:55:00.001-06:00

I reviewed the Marcus and Millichap 2010 Apartment Outlook today and wanted to share a few things that I took away regarding the fundamentals of Chicago Multifamily Real Estate and the outlooks for 2010....

The researchers at M&M feel that investment activity has bottomed and we are in the beginning of a recovery.
The midwest, including Chicago, was not battered as badly as other parts of the country in terms of employment loss and occupancy rates. Because of this Chicago multifamily real estate valuations were not hit as hard and therefore will not have steep rebound that may happen in other parts of the country.
The valuations for Chicago in this report are right in line with Root Realty's opinion of where Cap Rates are in the Chicago Multi-Family sector.
As a wrap up, Chicago multi-family fundamentals will be driven by employment growth and many experts are anticipating growth in 2010.

Annual Apartment Vacancy- All Time High

2010-01-18T12:53:00.001-06:00

The US Census Bureau recently released its Third Quarter 2009 Rental Vacancy Rates.

2009       11.1% (through 3rd Quarter)
2008         9.9
2007         9.8
2006         9.9
2005         9.9
2004        10.1
2003          9.9
2002          9.0
2001          8.4
2000          8.2

The vacancy rate is up in the South, West, and Northeast, but remains unchanged from last year in the Midwest.

Root Realty believes that as vacancy rates improve so to will valuations for Multi-family housing. In the short term, housing stock that is being rented needs to be sold off, but longer term the next generation of renters is on the way and rental housing should boom.

Sold

2010-01-14T13:22:00.003-06:00

Root Realty completed the sale of a 12 unit mixed use in Lincoln Square today. 8.8CAP. Investment properties at a good price in a good location are moving. http://www.rootrealty.com/

exciting website updates

2010-01-07T14:22:00.003-06:00

Root Realty is currently updating http://www.rootrealty.com/ to become the #1 website for Chicago Property Management. The updated site will not only have information for property owners and investors, but will also have functions that make life for our tenants easier.

The Fed Rescue Plan could be a boon for RE

2008-09-19T10:41:00.003-05:00

In today's unsettling financial and real estate markets we are all looking for something to give us confidence. Todays announcement of the bank bailout should be just that.

Real estate values and transactions have been crippled by the lack of credit available to potential buyers. The reason for this credit crunch is due to the banks apprehension to add more loans to their books because of the losses that they have due to loans that are in default. When the banks look at the underlying value of the loan collateral and see that they have loans outstanding that are worth more than the value of the real estate collateral, they need to reserve capital in case of a default. This adds to less liquidity for the bank and therefore less capital to lend. These bad loans are reffered to as illiquid asstes.

Hank Paulson's plan is to have Freddie Mac, Fannie Mae and the Treasury Dept take these illiquid assets off the bank balance sheets. If this plan is structured correctly we could see the credit markets open up and lenders having the opportunity to start over using prudent underwriting to make loans. This should bring the transaction volumes up and we should see a bottom in real estate values. So lets keep our fingers crossed that Washington is able to make a quick decision for a solid rescue plan.

Buy Up In a Down Market! Gain Equity!

2008-06-26T11:09:00.001-05:00

Selling in a down market and buying a more expensive property, assuming both properties have depreciated at about the same rate, can make you money. Waiting for the market to rebound can actually cost the seller more money than buying up in a down market.

When real estate values are down it is the right time to buy a larger property and take advantage of the discount. Consider this; you own a $1,000,000 property that is down 10%. Your property is currently worth $900,000, or down $100,000. A $2,000,000 property that is also down 10% is currently worth $1,800,000 or down $200,000.

If you make the trade and wait for the market to rebound 10% you have created $100,000 in equity.

I should have bought that property 20 years ago...

2008-04-30T17:51:00.005-05:00

How many times do you hear someone say " I wish I had been smart enough to buy that property 20 years ago"? Real estate has appreciated like few other invesmtents over time and I am writing a short idea on why todays market is not much different than the investment market in the early 9os,(almost 20 years ago) when I wish I had been old enough to buy real estate.

Back in the early 90s apartment building were selling near a 9% cap rate. (The cap rate is the first year return on the building, or the yield. It can be computed by dividing the NOI over the Purchase Price) Cap Rates work inversely to property values, so a high cap rate means the property costs less to buy. This was a good time for buyers.
Mortgages for this type of investment had interest rates of 10% or greater. So basically you are buying a property that returned 9%, but financing it with money that costs 10%. How did these people make money?

Well those people did make money. Fast forward to today.

Right now we can buy a building in a premier location for around a 6% cap (you can get buildings at better cap in areas besides Lincoln Park, Lakeview, etc. ) and finance it with money that costs 7%. Sounds like the early 90s if you ask me......

The Economic Stimulus Package Helps RE Investors

2008-03-27T11:11:00.004-05:00

The new Economic Stimulus package may have some lucrative tax incentives that will benefit investment property owners. Under this bill there is a "bonus depreciation" schedule that allows property owners and leasehold tenants to write off up to half the qualified improvements that are completed in 2008.

Typically, landlords who make an improvement, must capitalize the improvement or write it off on a depreciation schedule over 39 or 27.5 years, but with the change, landlords and commercial tenants can now write off 50 percent of the cost for "qualified leasehold improvements" in the first year alone, as long as the improvements are completed by the end of this year. The rest is wrtten off over 15 years.

The article that I read was referencing how this stimulus package can help commercial property landlords and tenants, but I believe it can also assist the owners of mixed use and multi-family propery who would like to make capital improvements, such as a new roof or installing seperate heat, etc. The benefit to the property owner would be a significant write off at the end of the year resulting in huge tax savings.

Please stay tuned as I will add to this as I get more information.

Read the Washington Business Journal Article.

This is why you should hire a broker for your commercial space

2008-03-04T22:58:00.007-06:00

Today I am working with a landlord who would like us to find a tenant for his retail space. The landlord is concerned about the tenant defaulting early on in the lease. Keep in mind the property we are discussing is not on Michigan Ave and is not on a lighted corner....so we are probably not going to find a tenant with rated credit. WHAT a good broker does for the landlord is negotiate lease terms favorable for the landlord in terms of a tenant default, specifically in this situation we may require the tenant to put up a greater security deposit. Additionally, we screen and identify the tenant. By screening, I mean checking the tenants refernces, credit, and business plans. By identifying the tenant we check out that the tenant actually has equity to lose and is not just a shell llc that would be easy to bankrupt in the event they wanted to default without consequence.

My first blog entry...

2008-03-03T22:32:00.007-06:00

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Your source for Chicago multi-family investment tips, advice, deals, and feedback.

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