All Forum Posts by: John Clark

My definition of "gentrify" is pretty narrow. Gentrification is where it makes economic sense to buy an improved lot at market price, tear down the building, and build new. Examples are Bucktown in the early 1990s, Wicker Park immediately thereafter, and then Logan Square. My property in Bucktown in the early 1990s tripled in value in less than two years, and it was one of those buildings where the first floor was below street level on a narrow lot.

So my test for gentrification is whether you can still make good money by buying an improved lot for the lot itself. West Elsdon will improve, but it's never going to be at the point where people buy for the lot and not the building. You'll see rehabs, but not tear downs.

Price increases of 150% over 10 years (Meaning a dollar then is $2.50 today) is about 9.6 percent a year return on investment. Nice, but not stellar, and certainly not invasion-of-the-gentry territory. Figure in property taxes and you're at a low-end investment grade bond as far as return goes.

My point is that the slope of the line for appreciation in West Elsdon is getting steeper, and it's interesting to watch it happen in real time.

What is your definition of "gentrifying?"

Interesting to watch. Akin to chartists plotting stock movements.

West Elsdon will never gentrify; it didn't go down and hit bottom, it's just been trundling along at a languid pace for years. Now, however, as areas to the northeast have picked up (Archer Heights, Brighton Park, etc.), West Elsdon is finally seeing more rapid appreciation before. For a long time there was resistance to run-of-the-mill bungalows breaking the $300,000 sale price level. This Summer they are starting to crack it. It will be interesting to plug in the data from the past three years, see how bungalows crowded the $300k level but didn't break it, and compare that to prices for the next two years and see if appreciation rates take off.

No, I'm not in the market down there, so it's just an intellectual exercise for me.

Why not call the real estate agent and tell him  there's a chance you'll be assigning the contract and will that be a problem. Go from there.

 My sympathies are with the lender on this one, as your attitude about "a little mold" has no basis. "Ninety percent of homes" -- in any area -- do NOT have mold, and there's no such thing as "a little" mold. Mold problems get worse exponentially faster until they are cured. If your "damp" basement has progressed to mold then you have a real problem, and no sane bank will touch it.

Get a professional. If something happens the tenant will sue you and try to make you look like a coersive cheapskate, even if it involves lying. Your tenant has one role: Be a tenant. Major stuff is not part of that role.

Ask yourself: WHY is the tenant willing to do it? He didn't create the problem, and you're not paying him for time and effort, so something doesn't add up.

 Actually, it doesn't. With very rare exceptions, one's never been able to have one unit of a duplex pay the entire mortgage. What it does do is make it so that you can live in an area that otherwise you could not afford to live in, since your out-of-pockets are lower. You have to start getting into four-flat territory before you can have the rents pay the mortgage, and your money build up reserves, etc.

Look at it this way: You live in Portland, Oregon. What would you be paying as an alternative to your duplex in order to live in Portland, Oregon? The assumption is that you have to live there. If you don't, then house hack somewhere else.

Whatever you do, get the idea that one rent takes care of the mortgage out of your head.