Amazing deal?

Question

Hi all,

I am fairly new to real estate and am looking to break into the Chicago market. I am a CPA and work with numbers for a living. I have one question for you. My goal is to buy a 2 BR condo and rent one of the rooms out. As an owner occupant I am pretty certain this would be ok with most condo associations. My question is this, I came across this 2 br condo foreclosure which I fell is dirt cheap for the area as the rent is fairly high. Can someone glance over this and explain to me how this could potentially be a bad deal?

http://www.zillow.com/homedetails/3950-N-Lake-Shore-Dr-APT-2315-Chicago-IL-60613/3713619_zpid/

Based on the Zillow my mortgage payment would only be $491 mo (with a 20% down payment) where I know for a fact I could rent the room out for approximately $700-$800 once it's in decent condition. Any feedback would be appreciated.

Regards,

Don

Jonathan H. · Answer

For what it's worth, you may want to refrain from posting exact links to the property on the site until you have a "option to purchase" agreement signed. It's best to just give the numbers and fill in the blanks as needed. In general, 99% of the people on here will be glad to help you with your analysis, but there will always be the 1% looking to "steal the deal" from you (assuming it really is a deal). Just my 2 cents...

Brie Schmidt · Answer

@Don Bradley - I was able to find an old listing. It had the assessment at $647 a month which includes Gas, Includes Common Insurance, Includes Doorman, Includes TV/Cable, Includes Exterior Maintenance, Includes Lawn Care, Includes Scavenger, Includes Snow Removal

http://www.redfin.com/IL/Chicago/3950-N-Lake-Shore...

So, if you get it at auction at that price your expenses would be

Payment $491

Assm $647

Tax $142

$1280 monthly payment

I know the area well, I used to live at 3420 N LSD - for an 11x10 bedroom I would expect you to get $700 ish for rent.

Also, with condos you have a limited exit strategy. Make sure you read the bylaws and see if you can rent it out if you ever want to leave. I know SO many people who cannot get out of their condos because the market here is so saturated with them

John Weidner · Answer

@Don Bradley

I checked the link and it does not appear to be an active listing

So a few comments:

1. Agree with @Matt Galas that the assessments could be high like $800+ per month

2. Allowing roommates you need to check the bylaws...

What's your goal? Are you set on a specific location? I see your in Homer Glen if you need any help on the N side let me know. I'm a broker and live on the NW side

Matt Galas · Answer

On my phone and haven't even opened the link but I am going to say based on the address that the monthly assessments are ridiculously high. The condo is likely pretty outdated as well and there is a good chance the building is going to have special assessments.

Tim Cooper · Answer

Hi Don,

That is an excellent way to get started. In 1988 I bought my 1st house & got a roommate. Then I sold it 2 years later and bought a house and a 5 unit apartment building.

Best of luck to you.

Timothy Riley · Answer

welcome

Don Bradley · Answer

Thanks for the advice Jonathan. I am not necessarily looking to buy the property just wanted some insight on how to analyze such a deal.

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