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November 14, 2006
House of the Day: 498 Henry Street
This FSBOisn't going to win any beauty contests (it appears to have been stripped of much of its charm over the years), but it's a decent-sized building in a good, albeit somewhat commercial, location. The rental income on the four-family is $96,000 which will barely cover the mortgage when you allow for $20,000 or so of expenses. So the buyer's going to have to be someone who wants to grow into the building or an investor with a very long time horizon. Anyone know how long this has been on the market?
FSBO House [498Henry.com] GMAP P*Shark
Comments
This is a great location, not sure about the inside. I think it's only been on the market for a month or so..
Posted by: Anonymous at November 14, 2006 1:10 PM
you mean it will NOT cover the mortgage. it really irks me when I see the calculation on something like this being done assuming a 75% loan to value ratio. It is intended to deceive very inexperienced investors. The reality is that a fully rented building should pay for itself (interest on mortgage + expenses) on a 100% loan to value ratio. Interest on $1.7 million at 6.5% = $110,500. Expenses probably at least $20,000. Therefore, you take in $96,000 in order to pay out $130,500. What's the sense in that?
Or does someone want to mention "capital appreciation"?
Posted by: anon at November 14, 2006 1:35 PM
It’s priced at $1,695,000 for a 4 story, 20'x50'building. The price is too high "especially" considering the low end fixtures inside. I would price it around $1.2 - $1.3 million tops
Posted by: Anonymous at November 14, 2006 1:36 PM
I would agree with the 1.2 - 1.3 million pricing. Then again, there is a 3-story shell for sale up Henry St (closer to Atlantic) asking 2 million. Ridiculous.
Posted by: Anonymous at November 14, 2006 1:45 PM
This has been on the market for at least 2 months, maybe longer.
Posted by: Anonymous at November 14, 2006 2:09 PM
The asking was originally $1.795 million. The size of the lot is 20x75, i think. i would buy it at 1.2-1.3
Posted by: Anonymous at November 14, 2006 2:34 PM
propshark show lot as 66' deep.
Posted by: Anonymous at November 14, 2006 3:57 PM
Not that its any less or more pricey than in similar Chicago neighborhoods I buy and sell in, using the Income Cap Approach (with either single year caps or 'aggressive' revenue multipliers) indicates the subject property you mention doesn't make financial sense for much more than a million--or maybe its just that all the low appraisals that have come in as of late have me brainwashed an a bit gun shy.
Posted by: geno petro at November 14, 2006 4:28 PM
I think once the leases are up, the rents can be $200 to $400 extra a month per apt with little renovation.
Posted by: Anonymous at November 14, 2006 6:44 PM
the Taxes are $15000 a year thats right fifteen thousand folks. Also the guy has had this on craigslist for months. Get real the home is worth 1.2 mill no more. also next to a cleaners no way Cancer fumes.
Posted by: Anonymous at November 14, 2006 6:56 PM
what you're saying is a little bit Greek to me, Geno, but it sounds interesting. Care to elaborate?
Posted by: west at November 14, 2006 8:01 PM
West, It probably sounds Greek because I daydream better than I write!Basically I use Landlord's Cash Flow Analyzer (rentalsoftware.com) and plug in the numbers. I agree with an earlier commentor about basing ROI on 100% LTV. In this case, $2,000 a month per unit X 12 mos X 4 units X a multiplier of 11 (typical northside Chicago for a similar building) + $30,000 a year for expenses (including property taxes? seems too low) + title & closing costs = too thin a deal for me at much more than a 1Mil, 1.1M Selling price. Then again, I'm not really the buy and hold type nor am I any great investor. I do list and sell 1.5 to 2mil a month in property as a realtor, though so I see these types of deals fairly often. G
Posted by: geno petro at November 14, 2006 9:06 PM
this house has been on the market for near 6 months. he uses craigslist and originally had it for $1.795M. He wont respond to anything lower than %1.6M
you can only access the basement thru the first floor apartment. $2000/mo rent wont beat a 5% cap rate and 1 of the 2 bedrooms is only 8x10.
Posted by: Anonymous at November 14, 2006 11:08 PM
I think the killer is the $15k tax bill. About $10k more per year than other 4 fams this size/location.
But if 1st floor could be made commercial ?
I know investor numbers may point to $1.2 or so but you can't buy anything around there for that kind of (low)price so forget that.
Posted by: Anonymous at November 15, 2006 10:08 AM
If I were going to buy this, I would not plan to use it as a 4-family. This building would have more value if it were converted into either a triplex with rental or a double duplex. that tax bill is a killer, but you could likely get it adjusted down if the c/o was changed to a 1-2 family.
Posted by: Anonymous at November 15, 2006 10:23 AM
Thanks Geno. I definitely get it now! It sounds like this guy is waiting for someone who wants to convert it to a one or two family then.
Posted by: west at November 15, 2006 10:27 AM
Those numbers don't work with the tax. Add heat, maintenance, insurance, etc. and you have a butt ugly building which barely pays for itself.
Posted by: donatella at November 15, 2006 11:05 AM
with so little character left over and a setup solely as a 4 apt. with sep. utilities how on earth would you divide this place into two duplexes and still have it worth $1.7M?
Posted by: Anonymous at November 16, 2006 12:33 AM
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