Eileen Landau, ABR, CRS, e-PRO

You remember the song? "If I were a rich man" from Fiddler on the Roof.

Well, in today's real estate market, here's what I'd do.

Let's suppose that I had a million dollars (remember this is my fairy tale). I'd go out looking to buy four Naperville homes whose value would range between $400,000 and $600,000. I'd negotiate very carefully and try to buy these properties way below their listed price. Maybe 75% or 80% of their value. I might have to write 10 offers to get one together. And, I'd put down 50% of the price paid for a fixed 30 year mortgage. That would mean that I'd make monthly income (not a lot at first) from the rents. It would also mean that I could keep my rental prices below market which would mean that I'd get my houses rented.

So, I would be leveraging my million dollars and would end up controlling two million dollars of property. I'd hold these investments (and yes they are investments) for seven to twenty years. Again, that's long-term. And, when I retired, I could sell one of the properties and live quite contentedly for many years. And, I'd still get monthly income from the other properties.

Ah....If I were a rich man...

But, I'm not. And, I suspect, you're not. However, if you have some reserve funds just sitting, this may be a wise investment approach. Let's say you have $50,000. You could buy a $200,000 townhome and rent it out. In fact, if you have older children and would like them out of your hair, this might be the way to do it. And, they can have roommates who would each contribute to the monthly rent. Not a bad idea, is it?

So consider when everyone is screaming how bad the real estate market is, it means that for wise investor, it's a time to buy. Just like the stock market. When everyone is selling and your hand shakes as you place that order, it's usually a good long term investment.

C 2007 Move UP to Naperville Blog, Eileen Landau

I was out showing homes in Naperville school district #204 before my vacation and I had the distinct impression that prices were lower. So, this morning I did some research which backs up my "feeling."

Harmony Grove 2006 Closed Sales

27 homes closed

$420,000 to $575,000 sales price

Average Price: $483,000

Harmony Grove 2007 Closed Sales

17 homes closed

$424,000 to $621,000 sales price

Average Price: $471,000

Hmmmmmmm...fewer sales and lower average prices. Also, noticed more vacant listings and higher buyer agent's commissions.

Ashwood Creek/Ashwood Park 2006 Closed Sales

18 homes closed

$599,000 to $1,068,000

Average Price: $811,247

Ashwood Creek/Ashwood Park 2007 Closed Sales

27 homes closed

$453,000 to $1,060,000

Average Price: $730,340

The Ashwoods are newly developed sub-divisions in far southwest Naperville. Their clubhouse opened this past year. I believe that when completed there will be over 500 homes. However, based upon the above figures, it's going to take a lot longer to complete. Now, there could have been more sales, direct from some of the builders that were not reported to MLS, but I don't think that will change what we're seeing. Lower prices, more builder concessions and upgrades and long, long market times (over a year in many cases).

If you're a buyer (without a home to sell) then you're in a great negotiating position. And, if you're going to live in this home for five or seven years, you'll do OK. If you're thinking that you might move sooner, then consider renting as a temporary measure.

Stats courtesy of MLSNI.

C 2007 Move UP to Naperville Blog, Eileen Landau