Mary Nack, REALTOR - Chicago IL

Last week, I received a phone call from a prospective seller. They own a property that has been sitting vacant for quite some time. They have been trying to sell the property themselves but to no avail. In the meantime, the city is threatening to condemn the building unless they repair it - which they are unable/unwilling to do. So, the building is a tear-down and all they really have to sell is a vacant lot.

Listening to this story, I told her that her property was only worth the price of vacant land. In fact, whoever buys it will also be faced with approximately $25,000 in demolition costs - so it is worth even less! She was not happy to hear this and unwilling to sell the parcel for the price of vacant land.

I then asked if she and her family had considered developing the lot: tear the existing structure down and build condos which they could then sell. Some quick research showed that new construction condos are still selling very well in this location - even in this economy! Her reply was they wouldn't even know where or how to begin. So I proposed perhaps they could partner with a builder. They contribute the land, the builder contributes everything else. When the condos are sold, everyone gets paid back what they have contributed and then share in the profits.

She thought this sounded like a good idea. So I proceeded to put out some feelers to see if there were any builders interested in such an arrangement. Well! I had 3-4 different builders very much interested! So I arranged for the family to meet with the builders to explore a possible partnership.

Once the idea looked like it might actually happen, the family became nervous. How was this going to work? Are we going to have to come up with money? They had a million questions. Naturally - which was the point of the meeting: to explore the possibilities. Finally, she called me and said,

"We don't want to meet with any builders. We just want them to buy the building from us. We will accept $450,000."

(Now, mind you, this was a big drop in price. Previously, they wanted $650,000 for the property! Which explains why they hadn't been able to sell it themselves.)

Me: "But the lot is only worth (maybe) $150,000 - max!"

Seller: "No. If they will pay us $450,000, then we will sell it to them. Otherwise, we are not interested."

BAM! Door shut. End of conversation.

I am not even going to discuss the time and energy I put into solving this problem for them. But then that's what we do in this business. That's what we (sometimes) get paid for.

Their attitude is a mystery to me. By doing what I am proposing, they would put something like $350,000 in their pockets - after expenses and closing costs! - for a property that is worth MAYBE $150,000. In essence, my solution creates an additional $200,000 for them!

But it's easier and simpler to live with the fantasy that your $150,000 parcel will someday bring you $450,000.

"All Things With Exuberance!"
mary!

The Chicago Tribune this morning posted sobering statistics about the soaring rate of foreclosed homes in Chicago. The year-end figures paint a picture of a local housing market brutalized by foreclosures over the past 3 years. 70,000 homeowners have received initial notices of mortgage defaults in 2009 - 24,000 of those in the fourth quarter alone!

The challenge is that once these properties are taken back by the banks, rarely are they suitable for a typical first time homebuyer to purchase - even at deeply discounted prices.

The city has received more that $150 million in funds since July from the Neighborhood Stabilization Program - a federal program designed to prevent total collapse of the housing stock in the city. Renovations are just getting under way with 43 developers participating in the program.

(For more information about the NSP in Chicago, click here.)

Private investors and contractors can also team up to accomplish much needed renovation of foreclosed homes. To listen to an instant replay of How To Use The FHA203k Program to purchase these properties, go to http://mnack.net now!

"To Your Success!"
mary!

In 1977, I was a young bride and a young mother, we moved to East Ravenswood because of the amount of space we could find for the money. Little did I know that 32 years later, Ravenswood - now morphed into Lincoln Square - would still be my home! What are the things that have kept me here all these years? Compare your notes with mine and see if you agree:

1) I love Lincoln Square/Ravenswood because of its easy access to the Brown Line:
It took me years to get over calling it The Ravenswood Line. The Brown Line arm of the el system snakes through the neighborhood making access to downtown easy and convenient.

2) I love Lincoln Square/Ravenswood because I can walk to anything:
Welles Park, the Sulzer library (the first regional library in the city that replaced the Hild library - now the home of the Old Town School of Folk Music), The Davis Theatre and within the last 5 years the revitalization of Lincoln Ave. as the incubator of fabulous food - there is little reason to ever leave!

3) I love Lincoln Square/Ravenswood because the merchants know you:
This one might be my favorite. Just like living in an small town, after 3 or 4 visits, most merchants recognize you, call you by name and give you that extra service reserved for "regulars"

4) I love Lincoln Square/Ravenswood because of all the community activities at little or no cost:
From the "greening of Ravenswood" event in the Spring, the Ravenswood Art Walk, the Old Town School of Folk Music "Folk and Roots Festival", the Ravenswood 5k Run - the list goes on - there are so many opportunities to meet your neighbors and play with them for next to nothing.

5) I love Lincoln Square/Ravenswood because of thefantastic housing at still affordable prices:
I realize that this is a relative thing. However, we enjoy the amenities of Lincoln Park at 1/3 the price without the congestion. We can still park our cars in front of our homes. And, unlike Lincoln Park, we know our neighbors. We feel safe raising our kids and coming home late from work.

6) I love Lincoln Square/Ravenswood because of the fantastic schools:
There are so many excellent private and public school options - and at affordable prices: Pilgrim, North Park, Waters, Ravenswood, Bell, St. Ben's, Queen of Angels. Parents are involved and children receive lots of individual attention for the best learning environment.

I know you will agree with me: Lincoln Square is a neighborhood where we can "still park the car, walk to the corner bistro, raise the kids and even send them to Harvard." Share with me what YOU love about Lincoln Square - Ravenswood...

Serial entrepreneur extraordinaire Howard Tullman was interviewed awhile ago by Crain's Chicago Business. I just rewatched it again. It is worth watching, re-watching and taking notes. The man is brilliant. Check it out:

http://www.chicagobusiness.com/TalkingManagement/Tullman.html

Howard has owned 11 businesses and is still involved with 5 of them. In this interview, he discusses some of the aspects of starting and managing a business. He teaches entrepreneurship at Kellog.

"All Things With Exuberance!"
mary!

Over the past 5 years or so, I have noodled around with different notions on how to help my clients invest shrewdly yet prudently in real estate. Believe it or not, when the market was so hot, it was difficult to find a "good deal". Apartment buildings were just ridiculous expensive. The prices at which they were selling had no basis in the amount of rents they were getting. That's because condo developers seemed willing to buy them at any price. Yeah, the condo market was blistering. Even so, I don't know how those guys made money. You know - the old "supply and demand" thing. Demand was high, but there was plenty of supply (as we now know). I suspect a lot of them lost their shirts - or maybe just their lenders did, since they probably financed 110% of the project and had themselves personally protected behind their "corporate veils". But that's another story for another day.

I have never wanted to be responsible for putting my clients into an investment that didn't accomplish their goals. The idea, after all, is to not just sell them one property but many. That can only happen if they are successful in achieving their goals. With the down-turn in the economy, the deals are much easier to find. Yes, financing is harder to get - but cash is always king.

(BTW - as a complete sidebar - a "sure thing" long term investment opportunity now may be investing in companies that make mortgages. Most of the bad loans have already been written off and the mortgages that they are making these days are crazy A+ paper! They really use any excuse they can manufacture not to make the loans. Pity they weren't 1/10 as scrupulous just 18 months ago!)

I have always maintained that if you're going in the opposite direction of the herd, you'll probably do just fine. People are afraid to jump into the market now - when they SHOULD have been afraid 2-3-5 years ago!! NOW they should be buying as much property as they can!! Prices (in Chicago) have rolled back at least to 2004 levels. With the Fannie Mae/Freddie Mac bail-out, interest rates may be coming down even lower. As I've already said, it's an inverse formula: a 1% INcrease in interest rates translates into a 10% DEcrease in pricing to offset that increase. Vice versa - if rates come down another 1/2%, a purchaser can easily absorb a 5% price increase. Even if we aren't at yet at the bottom of prices falling, it gives you plenty of buffer. The general consensus is that prices may drop another 1or 2%. Certainly not 5 or 10%!

I'm thinking we have about a 60 day window before interest rates start to climb. That window starts to close on election day.

To help my clients take advantage of current market conditions, I am instituting an "Income For Life" investment program. I will coach my clients all the way through from purchase to sale to assure their success. I am partnering with other financial service providers to create education forums in general financial literacy as well as specific real estate investing education. (We launch our first program on Thurs even, Oct 2. "News at 11".) I've always loved "Rich Dad's" materials. However, when you put the book down, you don't know where to begin or what to do. I want to remedy that. I want to move my clients from the theoretical to the practical achievement of their goals.

My current client base will serve as my "guinea pigs" as we refine the pieces of the program. And as such they will receive my services free. Once we have the kinks worked out, that will no longer be true. This is a program that can literally transform your life and be worth hundreds of thousands of dollars in passive income! If what I'm saying makes sense and you want to participate, I urge you contact me today!

"All Things With Exuberance!"
mary!