In today’s volatile economic market, it’s more important than ever to consider the future when purchasing Chicago real estate. Any property has unique characteristics and variables that can affect the future value when you’re ready to resell it down the line. So while you may find a property that looks beautiful and is priced right, it’s crucial to evaluate all of the pros and cons first.
For Chicago condo buildings, buyers should also be sure to check out other properties within the building, not just the one they may be interested in buying. Not only can this help tell you more about the building as a whole, but it can tell a buyer what type of competition they’d be looking at when they are ready to sell in the future.
Here are 20 important considerations when thinking about a property’s future resale value:
1. The taller the better: If you’re looking at a simple difference like 8-foot ceilings versus 9-foot ceilings, go for the 9-foot. High ceilings are coveted by many buyers, and having the extra space when it’s time to sell can make a difference.
2. Show me the view: There is without a doubt a premium price attached to a property with a totally unobstructed view. With Chicago condos, views and the light coming into the property play a major role in determining its price.
3. Get the real thing: Check to see if those hardwood floors are real. Many Chicago real estate buildings have prefabricated or thin, industrial European floors. These types of floors make it difficult to change the color or eliminate scratches since it cannot easily be sanded.
4. Renters cap: Many buildings have a maximum number of rentals allowed in a building. Many also have a wait list—be sure to learn the numbers for both.
5. Renters cap, part II: If the number of rentals allowed within the building exceeds 30%, check to find out how many banks will issue a mortgage for that particular building. This can be difficult to maneuver around, and I don’t typically recommend purchasing in a building with more than 30% rental units.
6. Renters fees: Find out what fees, if any, are involved should you decide to rent out a unit that you’ve purchased in a particular building. Some buildings have move-in and move-out fees that can be as much as $1,000, and typically the landlord is responsible for paying those fees.
7. Rental procedure: Should you need to relocate and decide to rent a Chicago condo that you’ve purchased, make sure that you know the procedure. There are buildings, particularly Chicago co-op buildings, that have restrictions that only allow owners to rent out the apartment twice or you’ll face a one- or two-year restriction.
8. Assess the assessments: For example, a unit that is two units combined into one will face higher assessments and can be difficult to sell because those assessments are so high compared to other condos in the same building.
9. Assessments and age: If an older condo building has assessments that are more than $1,000 per month, check the assessment history for the last five years, the condominium capital reserve and the anticipated capital improvements.
10. Foreclosures: In this market especially, it’s key to know how many foreclosures (if any) have occurred in building you’re interested in purchasing.
11. Check the numbers: If you are purchasing a foreclosure (or short sale) and paying cash, you and your attorney should check the assessment amount indicated on the listing sheet with both the management company and the bank representative to ensure it is correct.
12. Outstanding assessments: Ask to find out how many people are not current on their assessments, and the total outstanding amount of assessment receivables. This will give you an idea of the financial health of the building.
13. Building finances: Make sure you know if the building has an outstanding loan or a line of credit.
14. Concierge services: Whether you plan to take advantage of them or not, learn what each and every available concierge service the building offers. A wide range of services and amenities are a great way to attract future buyers.
15. Balconies: When its units with a balcony versus units without a balcony—the balcony wins.
16. In-unit laundry: Having a washer and dryer in a unit is always preferred to a laundry room in a building. It’s likely it will be on the next buyer’s list.
17. The plan: See if the building has a five-year plan. If they do, ask to see it.
18. Meetings: Take the time to review the building’s meeting minutes for the last six months up to a year. See what was discussed, what issues they’ve tackled, etc.
19. Electric versus gas: Gas-powered buildings are preferred when it comes to future resale value of Chicago condos.
20. Comparison shopping: Identify at least three similar buildings and make a spreadsheet to determine what you should initially offer the seller. The variables to consider are: assessments, age of the building, price per square foot, unit appliances and finishes, plus floor, view and location within the building. I’m happy to help you as a potential buyer determine how to begin this comparison.
So while location is everything, and the price may be right, there are certainly other factors to consider before you make a Chicago real estate purchase, even if you plan to live in the property for an extended period of time. Give me a call at 312-264-5853 or email me at [email protected] to talk about a building you’re interested in building and take these points into consideration.