I am currently collecting and analyzing my research of a two flat for sale off of Logan Boulevard.  The asking price is $304,000 and electronically via the MLS the pictures look good.  I estimate the building is about 1,100 square feet per floor with a normal Chicago lot size of 3,125 square feet.  Plus the listing claims it has a finished basement but this probably won’t be worth a whole lot. 

The significance is that this is the most significant price drop that I have seen in this premier section of Logan Square.  The listing originally started out at $650,000 a while back and then the seller lost the property to foreclosure.  The lender in this case is Fannie Mae and is also the current owner, ie this is a REO or bank owned property.

I am showing my buyer the property this afternoon and plan on creating a follow up post  on the true  condition of the building and more.

As a Logan Square resident and Chicago Real Estate Broker, I am constantly reading various media sources about our local housing market.  It bothers me that the national news reflects so much on our local situation when in fact it doesn’t at all.  People often see the pricing declines in California and think it applies locally.  Further people often read general local studies on pricing and apply it to themselves. 

Chicago has hundreds of separate real estate markets depending neighborhood, location within the neighborhood, property type, size, finish level plus much more.  The point is to get specific pricing information about your property and do not rely on general data studies that look broadly at these markets.

An example of a broad study follows:  http://www.chicagorealestatedaily.com/cgi-bin/news.pl?id=31845.
  

Bad economic news is abound and everywhere and it doesn’t seem to be slowing down anytime soon.  We need this news to stop or at least be mixed with good news for the Chicago real estate market to continue breathing. 

I remember last August when the first tidal wave of bad news hit.  Immediately the phone stopped ringing for our listings and buyers all the sudden were not interested in doing showings.  I feel like right now is much like last August except worse because the news is much more catastrophic.  Couple this news with the upcoming typically slower real estate season of Fall and Winter and you have the best buying season of the last fifteen years in Chicago. 

For those of you who think you are going time the "bottom" of the market by holding off for awhile, think again.  The bad news will soon be over and the spring buying season will be here before you know it.  Now is the time.

I personally know a large number of Chicago real estate investors who got started with a three flat as their first investment.  Three flats tend to be very safe initial investments as they are easy to rent and tend to have smaller operating costs.  However with that being said, it is very difficult for many to get started this way due to the sizable down payment required.

What if I told you there is an easier way to get started in real estate investing?  The idea is simple; buy a condo with two or more bedrooms.  You can live in one bedroom and rent out the others.  Think about it; you will apply this rental income towards your taxes and mortgage plus save a portion.

Say you collect and save on average $600 per month over a three year period from your renters.  At the end of three years you will have accumulated $21,600 from your renters.  This amount equates to a 5% down payment on a $432,000 Chicago three flat.  You now can control a nice brick three flat using 100% Other People’s Money (OPM).  You will have your 5% down payment from the renters and 95% from the bank loan. 

I know this strategy is not for everyone, but I think it will work great for many.   Either way, take control of your future by owning real estate.

Many smart people have told me through the years that contrarians make money by buying in bad markets.  As it stands right now, those that are currently purchasing real estate are definitely in this class.  I think a lot  of smart people are buying right now; however, I don’t feel that many of these people are first time buyers.

Chicago first time home buyers please note that you should not be scared of this real estate market.  Why do I say this?  Prices have dropped overall, but many local experts feel the bottom is here so lock in a great price by buying now.  Chicago landlords are raising rents $100 to $300 per unit per month making renting much more expensive.  Further the U.S. government is offering first time buyers a $7,500 credit towards your next Federal tax bill.  This benefit won’t be extended forever.

The bottom line is to challenge yourself to consider buying now by being a contrarian.  Buying when everybody else is buying tends to be a losing proposition. 

Chicago is made up of many different neighborhoods, but what makes them all so unique is the difference between them all.
Take for example University Village, which is defined by these boundaries, to the east is the Dan Ryan expressway (90/94), to the south is 16th St (actually the train line), to the west is Racine, and to the north is Roosevelt road.

University Village is anchored by Halsted and Maxwell Streets the original home to Chicago’s Blues music. From Roosevelt road to 15th place you can find many different shops like restaurants, boutique stores, and numerous bars. This area really seems to be thriving and full of people enjoying the neighborhood.  

University Village, is named because it rest on the south edge of  The University of Illinois at Chicago (UIC) and also the university used to own much of the land here.  There are a few smaller neighborhoods within University Village (others may say developments). Those communities are  Ivy Hall, University Commons, University Village, University Station, and  Roosevelt square.

Probably one of the strongest themes throughout University Village is the amount of open and green space available. From the huge UIC softball fields, tennis courts, and running track, which the public can use, to the many nice kids parks, and smaller well manicured courtyards.

I just completed a quick keyword search within the MLS for listings that are labled with these terms.  What I found is no matter the neighborhood, you will find properties and distressed sellers.  I found a brick single family homes in North Center, condos along the lake front and three flats all over the City. 

Essentially REO and bank owned are exactly the same thing while a short sale and pre-foreclosure usually mean the same thing.  There is more risk for buyers with short sales as the negotiation happens first with the seller and then with lender who made the loan.  The important thing is to get educated on both types of sales before negotiating an offer.  The best way to receive this proper education is to use a real estate broker and attorney who have navigated these waters together before. 

It is no big secret that we are currently in a "big" slow down for our local real estate market.  Even in slows times, there still seem to be winners.  And what are those winners?  The winners are anything Greystone and lofts in historically strong buildings.  These two property types have continued to go contingent in the MLS even with all the doom and gloom media on local real estate. 

As potential home buyer, what does this tell you?  Well it probably tells you alot of things.  First, prices are not going in the wrong direction for these property types.  Second, you might lose out on a property if you are not committed to writing the offer.  Third, your resell prospects may be significantly greater if your are considering another property type.