Chuck Gullett\’s Blog

My visit to the DMV “Express” at 69 W Washington to renew my driver’s license on 3/16.

It’s great being a Realtor because sometimes you have a little free time during the day to get things done.

11:50 am – Woohoo!   No line and one open clerk at the counter.
I kinda wanted to keep my old license, so I brought a passport, a couple pieces of mail and some credit cards.

Good morning sir, how can I help you?
I’d just like to renew my license.
Do you have your old license?
No, but I brought other id from your list.

I hand her my passport and two pieces of mail with the current address.

I’m sorry, but your passport is expired.   Do you have anything else like a major credit card?
Sure.   Here’s a couple cards.   Take your pick.
I’m sorry, sir.   These are VISA cards.   I need a MAJOR credit card.
Ummmm… last I checked, Visa was a pretty major credit card.   Look, I’ve got 4 of them!
Do you have a Mastercard or American Express?
Nope, just Visa and Banana Republic.
Can you go renew your passport?
Ummmm… no, can you go get your supervisor?

Supervisor comes over.   Now there are 9 people in line behind me.

This gentleman would like to know if he can use a Visa.   I told him we only take major credit cards.
We do.   Visa is fine, we just don’t take debit cards.

Thank you, supervisor!

I make my way over to the cashier and I heard the last person in line ask how much a renewal is.   The answer was $30.   I have $33 in my pocket, so I’m good.
My turn at the cashier.

License renewal?
Yes.
That will be $35.
Huh?   It was $30 for the last person.
You have a motorcycle license as well.   It’s an extra $5.
Ugh.   I’m two dollars short.   Do you take credit?
We take Mastercard and American Express as she points to the sign.
No Visa?
No.   There is an ATM outside.

So I go to the ATM.   Wait in line.   Pay a $3 service fee and get my cash.
I wait in line again at the cashier (most other people from the line have miraculously made it past the clerk)

Hi, I’m back.
Ok.   It’s $30.
What?   $30?
Yes sir.
Hmmmm… ok.

I go sit down to wait for my photo op.   Trying to think positive.   I think 5 dolla footlong.

Sir?
Yes.
Can you come back over here?   It’s actually $35.
I kinda thought so.   Here ya go.

Some random lady in line chimes in.
If you are just giving money away, I’ll take some.

All I could muster was something between a smile and a crazed glare mixed with a weird laugh.
She didn’t say anything else.

Next, I get my picture taken.   That was quick.   I get my license and get outta there.   It’s only 12:40, but I feel like a decade went by.

In summary.   I highly recommend the DMV Express at 69 W Washington if you are looking to take your patience to its limit and feel awesome about how competent you are.

In our slower than planned condo sales market, the developer at 1224 W Van Buren (VB 1224) in Chicago’s West Loop neighborhood has chosen to rent select units in the new construction complex.   Over the past couple of years, several new construction condo buildings have converted over to 100% rental apartments.   But, this developer’s strategy is a little different.   He has chosen to rent certain units that may be a little more challenging to sell in today’s market.   Most of the units that are available for lease are 2 Bed/ 1 Bath approx 1000 sq ft with parking.   The condos are nicely priced at $1695/ mo, so they are very competitive with other West Loop rental properties.   Since it takes 45-60 days to finish units, the developer is working with renters to pick out their finishes.   I’ve never seen the opportunity for renters to pick out their own finishes before.   So, I’m wondering if they plan on converting tenants to purchasers at the end of the lease.   It could be a win-win for both sides.   I plan on taking rental clients though the property until they run out of units to lease.

BestChicagoRental.com

I always thought that there wasn’t much choice when it came to investments through my IRA, but that’s because I didn’t know the questions to ask or advisors didn’t know all the options.   A couple weeks ago, I attended a session on self-directed IRAs and learned some interesting facts. IRS regulations actually allow you to take IRA funds and invest in Real Estate, private companies, private notes and loans, futures, etc through an IRA custodian.   There are restrictions about investing in life insurance and collectibles, but I saw a world of possibility when I learned about the real estate side.   With the drop in Chicago real estate prices and a fairly flat stock market, there is tremendous upside to purchasing rental units and parking spaces using an IRA rather than savings.

From my standpoint, here are the biggest benefits:
1) You can take control of your retirement savings by using part of it for real estate purchases in a down market
2) You can purchase property without depleting your savings and you can partner on new deals
3) These are cash deals, so you have leverage on the purchase price and terms
4) Your portfolio becomes more diversified

How does it work?
The rental income that is generated goes directly to the IRA, the custodian pays out the monthly expenses (assessments, repair bills, etc) from the IRA account.   Your IRA account grows as long as the property is cashflow positive.   When it is time to sell the property, the profit from the sale is distributed to the IRA just like the sale of stock through a traditional IRA.   There is a yearly fee for the custodian that can vary depending on the amount of property and/ or the value.   I thought the fees were pretty modest between $195-295 yearly per property, especially since they are cutting checks and depositing rent for you.

Anyway, I was excited to learn about this option and plan on using it myself.   If you are interested or have taken advantage of a self-directed IRA program already, I’d love to hear from you. I’ll post my personal experience with it once I find the right property to purchase… luckily I know a good agent

What is the answer for the overpriced units that aren’t selling?   In Chicago, we have been seeing many of them convert to rental units.     This has really turned into a win-win for the new landlords and their tenants.   For the owners, leasing is a great deal because they can carry the property until the market rebounds and sell later.   For tenants, it gives them a great alternative to traditional apartment buildings.   They get to live in a luxury condo with all the perks of condo life at a fraction of the cost.   Due to Chicago’s current real estate market conditions, there are more condo rentals on the market than ever.   A quick look at bestchicagorental.com will highlight rental properties all over Chicago.   To give some perspective, our office has done 4 times as many rental transactions in 2010 than we did in 2009.   Rentals have become such a significant part of our business this year, that we had attorney Bradford Miller, who specializes in Landlord Tenant Law, come in to train our agents on navigating Chicago’s Residential Landlord Tenant Ordinance (RLTO).   Brad’s advice improved our processes and allows us to better serve our clients.

What should landlords look for in a tenant?
#1 – Good Credit.   A credit score of 600 or above is good, but make sure you run the credit report and look at the detail.   Below 600 doesn’t mean they will be a bad tenant, so let them explain why scores are low.   Above 800 with no credit blemishes will generally be an excellent choice… but, again, look at all the details.
#2 – Good work history.   Having a steady job with a stable company and paystubs showing more than adequate earnings to cover monthly expenses is key.   In Chicago, we get a lot of relocation clients, so the offer letter is important to look at as well.
#3 – Good references.   Most people are only going to put good references on a rental application, but be sure speak with references and previous landlords to get a feel for how the tenant will take care of your property and make timely rent payments.

What should tenants look for in a landlord?
#1 – Financial stability.   Is the owner up to date on payments and assessments?   Even if you get the best deal on the best place, you don’t want to move into a new place only to find out that the bank will be foreclosing or it is going into a short sale situation.
#2 – Well maintained property. You don’t want the inconvienence of constant maintenance issues.   Walk through and make sure the property is in good shape and everything is in working order before taking possession.   We have tenants fill out a property condition report to ensure the unit is in good order before move-in and our clients don’t get charged for pre-existing issues when it is time to move-out.   Also have a process worked with the landlord in advance if an issue pops up.   Chances are there will be a leaky faucet or something while you are living there, so having a process worked out in ahead of time will make things go much smoother.
#3 – Proper lease forms.   The lease is a legally binding contract and Chicago is a very tenant friendly city, so landlords should be following the rules.   If your new landlord isn’t adhering the RLTO and the lease forms do not comply, it is a red flag that you may have issues down the road.

It is very interesting how the Chicago real estate market has shifted in 2010.   Sales were very strong during the first half of the year, but the brakes went on after the buyer credit expired.   What’s left on the market are a lot of great condos priced above current market value, but bargains compared to the pricepoint where they originally sold.   Even so, they are just sitting and the marketing days are ticking away.   The units going under contract today are the true real estate bargains and deals.   Skilled buyers are snapping up the property now to reap the rewards later.   Bargain priced units combined with historically low interest rates still haven’t revved up the market as much as I would expect.   I think people are still leery that we haven’t hit the true bottom yet.   By the time   buyers realize we did indeed hit bottom, it will be months after the fast.   I suppose that is good news for my buyer clients… very little competition for purchases and plenty on the market to choose from.

The deals are so good right now, that we couldn’t pass them up.   This year we upgraded to a 2 bedroom and had to go through the whole process of selling and buying.   Following my own staging advice and prepping for all the showings was challenging! But, we were able to price right, show great and sell our one bed condo in 45 days.   On the purchase side, we got a great price on a really amazing unit with an interest rate in the low 4′s. Did we buy at the absolute bottom?   Only the future will tell, but I’m glad we jumped into the market now and there won’t be “wish we had” moments later.

Best Chicago Properties

Usually cash deals make for a speedy closing as compared to financed transactions, so I was a little surprised at a cash closing this month. My clients brought a bank issued cashiers check to purchase a 2 bedroom condo in Northbrook. When the closer inquired about the funding, we were informed about a new Illinois law that became effective on January 1, 2010. Basically, if a single party brings more than $50K to the closing, it has to be via wire to the title company escrow account. Cashiers checks cannot be accepted for more than $50K.

http://www.ilga.gov/legislation/BillStatus.asp?DocNum=2111&GAID=10&DocTypeID=SB&SessionID=76&GA=96

œ…funds in the aggregate amount of $50,000 or greater received from any single party to the transaction are wired funds…

The closing started at 3:00PM and the cut off for wire transfers for this bank are 3:30PM. We arrived at the bank to exchange the cashiers check at 3:34PM and missed the cutoff. The wire did go out the next morning and the property did close, but it was a big inconvenience to my clients and a surprise to both the buyer and seller attorneys. The closer did know about the new law, but didn’t inform anyone until we arrived. A little communication upfront would have made for a much smoother closing and happier clients! Just something to keep in mind for your next cash closing.

The decade long dream for residents in the West Loop, a nice neighborhood park off of Greektown, is finally becoming a reality.   As a Realtor showing property in the neighborhood, I would point out the vacant city block bordered by Adams, Monroe, Peoria and Sangamon and explain that one day this rocky, dirt covered lot will be developed into a lush greenspace instead of another new construction highrise.   Rolling their eyes in disbelief, clients would ask about whether it would be completed in their lifetime. Then I would get a hearty chuckle when I replied that the park is scheduled for completion by Summer 2010.   Unbelievable?   Not anymore.   According to the project manager I spoke with, the Lombard Construction crew will work until the ground freezes this Winter and finish it up by next July.   Since the groundbreaking in early October, progress has been good.   The old utility poles and transformers have been removed, the land graded and the reinforcement is being added for the berm on the Adams Street side.   When complete, Adams St Park will have a large seating/ gathering area, a dog friendly section and playground area for children.   Being just a stones through from the Best Chicago Properties office, I am already excited for the Summer ahead and enjoying lunches in the park.

UPDATE: The park is now complete and there are images posted here

Photography by ThreeSixtyChicago Media

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Chicago’s own gateway to the west, sprawling over the Eisenhower (I-290), is finding a fate similar to other slow selling properties in the market.   This former US Postal Service office is being auctioned off to the highest bidder on August 27, 2009.   With an opening bid of $300K, equivalent to the price of a small 2 bedroom condo, it is attracting a lot of interest from qualified buyers and interested onlookers.   This low of an opening bid was a smart move by Rick Levine and Associates to generate a lot of property buzz and possible bidding frenzy.   The last Rick Levine and Associates auction I saw in the neighborhood was a few years ago at the infamous “River City” condo/ marina development at 800 S Wells in the South Loop.   Oddly enough, the old post office is even more distressed than River City!   Anyway, back to the pricing discussion… at 3 million square feet, the bidding will be starting out at 10 cents per sq ft.   This is ridiculously lower than the resale prices at around $300+ sq ft or some of the recent developer closeouts at $265+ sq ft.   I should also point out that there is no minimum bid, so the property could be snapped up for much less than the opening bid.   A property is really only worth what someone will pay for it.   With a building this massive, it is hard to imagine what it could be used for.   Is it possible to subdivide into smaller parcels and actually flip this property to investors and developers?   The site would make a great place to expand the Children’s Museum and add some convienent downtown parking with mixed retail spaces.   Could this behemoth space take advantage of federal funding and be converted to an alternative energy center?   There are tons of possibilities, and, if you have any great ideas for it, I’d be in for a few square feet.

Photography by ThreeSixtyChicago Media

More great news for the first time home buyer…
First Time Buyer Tax Credit Can Be Used for Down Payment
Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, on Tuesday said that the Federal Housing Administration is going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.
Mortgage rates in Chicago also hit 4.82% this week and home prices are still low.   There has been a lot of recent activity on listings, so this combination will definitely get first time buyers off the fence.   It is just a matter of finding the right property.   I wish I was a first time buyer in this market… what an opportunity!!