Investment in River North a good idea? (Chicago, Mark: appointed, short sale)

[divakat]

So we live in the suburbs but are looking for a 1br in Chicago so we can enjoy city life on the weekends. We love the building at 405 N Wabash and have been monitoring things there for about 6 years now. Prices have come down a lot and the area just seems to get better and better. Thoughts on River North and/or this bldg?

[urbanlife78]

If you can afford a second home and want something within the city, I don't see why not. It looks like the housing costs have hit bottom and are starting to rise again or level off for plenty of areas in Chicago. So if you can get a place for a reasonable price, it could be worth it.

Other than that, I don't know anything about that building other than walking past it before. Someone who is a local might have a better idea than I do, I just have been killing time looking at Chicago real estate this summer and have noticed these trends.

[Jandur]

I'm not an expert, but it would be hard to imagine prices in River North dropping more, if at all.

Plus if for whatever reason you had to rent it out, I doubt you would have much of a problem.

[Vlajos]

Long term the area will only get better, if you buy today and have to sell next year, you will lose money almost certainly.

[gomexico]

Yes, if you can afford a second home ... go for it. A wonderful location, that building. But I wouldn't make such a purchase thinking it was an investment that would grow in value. Though I think it will increase in value, we've larned painfully these pasts 5 years that the old rules of buying real estate, holding it and later selling it at a nice profit have changed. That neighborhood will only get better, and more in demand.

[emathias]

In general, a 1-bedroom condo is not an investment vehicle. If you want a second home then it's a great location and will almost certainly appreciate in the long term. But buy it because you'll use it and will hold it long enough that it will appreciate at least enough to cover your closing costs, don't buy it as an investment or you're almost certainly going to be disappointed - not because it's a bad area, but because the carrying and transaction costs on a 1-bedroom condo in a high-amenity building with both elevators and doormen will drag very heavily on your ability to realize a profit unless you're able to buy it for significantly below current market prices (i.e. a distressed sale - short sale, foreclosure, etc).

That's not necessarily bad to have high costs - sometimes it's absolutely worth the price to get those services. But only if you're using them. If you'll only use them a few times a year and it will sit vacant the rest of the time, then you're probably better off just staying in a nice hotel those times and investing money in a lower-cost condo in a cheaper, but still likely to price-appreciate neighborhood somewhere else in the city.

[divakat]

Thanks---we are buying it to use it most definately, but want to make sure that we can also rent it out if we need to. Anyone know what the estimated market rent is in that area for a 1br?

[ChiNaan]

I agree that it's probably likely to gain in value over the long haul, but not enough to make up for inflation, property taxes, association fees, maintenance costs, etc. By the time you factor that in, you're surely better off just getting a decent hotel room in the city a couple of weekends per month. If it's worth the extra money to you to have a place to call your own (the same place, with a kitchen, where you can leave stuff during the week, etc.), go for it, but I wouldn't do it as an investment.

To find rental rates for the area, check Craigslist. Be sure to check whether the condo association rules allow renting, as well.

[emathias]

Originally Posted by divakat

Thanks---we are buying it to use it most definately, but want to make sure that we can also rent it out if we need to. Anyone know what the estimated market rent is in that area for a 1br?

Market rent will vary fairly widely depending on how nice the unit is, what the views are like, etc.

For a basic small 1-bedroom in a not-so-nice building in that part of River North, maybe $1,300. For a typical one in a well-kept building with some sort of basic city view and a unit that's updated, you might be looking at $1,600+. For a new luxury building with stellar views, maybe as much as $2,000 or more.

So, like I said, it will depend on a lot of factors.

[It'sAutomatic]

That area has about hit its peak of gentrification. It'll appreciate, but I wouldn't buy it solely as an investment.