An Insider's Guide to Commercial Real Estate In Chicago

Cook County Commercial Investment Property: Tax Issues

An out of state bank recently hired us to sell 4 commercial investment REO properties scattered across Cook County.  After analyzing the listings the investor motto ABC (Anything But Cook) became clear.  Add up the 4 asking prices and it comes to $400,000.  Add up the taxes and you get $130,000, or around $33,000 a building.
With an asking price of $100,000 per listing the mortgage payment would be roughly $750/month while the taxes would amount to $2,700/month.  Yes there is something wrong with this picture.  We have received a ton of interest in the 4 commercial investment buildings, however, after the taxes are discussed that ends the conversation.  
Another tax disaster involved a note sale secured by a 4 unit mixed use building in the Lakeview area of Chicago.  After a month of dialogue between bank and investor the second tax installment came out at $27,000.  The estimated taxes for 2010 = $36,000.  With a potential gross income of $90,000 the taxes would eat up 40% of the gross.  The buyer backed out of the deal.
Once a building becomes REO it is common that the financial institution that owns it has not appealed the taxes.  The taxes are partially based on a previous sales price well above the new REO price.  I recommend talking to a lawyer that specializes in tax appeals to determine what, if any, tax relief you can expect.

Building Equity Commercial Real Estate
Web:: buildingequityre.com
Email:: solutions@buildingequityre.com
Phone:: 773.292.5188

Bank Owned Commercial Real Estate in Evanston IL

Bank Owned Evanston Office Building

1732 Central St., Evanston, IL 60201

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• Price:
  $659,000
• Building Size:
  4,750 SF
• Price/SF:
  $138.74
• Property Type:
  Office
• Property Sub-type:
  Office Building
• Property Use Type:
  Vacant/Owner-User
• Distressed:
  Yes
• No. Stories:
  1
• Year Built:
  1958
• Lot Size:
  0.17 AC
• Find Out More...

Last Verified  9/28/2010 Listing ID  16852425

Highlights

• Bank Owned
• Fully Built Out Office Space
• Ideal Owner/User Opportunity

• Great NW Evanston Location
• Steps from Metra Station
• On Site Parking

Description

The subject property is a single story fully built out office building. The build out includes: ten private offices, conference room, reception area, two baths, kitchen, storage area, and open office cubicle space. There is parking for approximately ten cars at the rear of the building. Building is completely wired for phone and internet. Turn key space for owner/user.

The subject property is located on Central St. just west of the Metra train station in Northwest Evanston.

Selling Commercial and Investment Real Estate in Today's Market

Despite negative commercial real estate publicity, selling commercial real estate in today's market can still be successful.  Investors continue to buy well located apartment buildings with strong cash flow at aggressive prices.  In fact, selling your apartment building now has several benefits.  First, your investment property will have less competition and therefor will receive more attention.  More attention leads to more competition, more offers, and a higher sales price.  Second,  sell in 2010 and pay only 15% in capital gains taxes.  The capital gains tax is set to increase in 2011; read our previous blog article for more specifics.  Third, cap rates are still low and GRM are high.  Building Equity RE recently sold a 6 unit apartment building in the Lakeview neighborhood of Chicago for a 7 cap.  Even more encouraging is that the buyer received financing at 75 LTV.  Apartment buildings with strong cash flow and low vacancy are still selling for high prices. Call Building Equity RE for a free market analysis and a custom made marketing plan.

Peter Lynn & Dan Rosenberg
		Building Equity Commercial Real Estate Web:: buildingequityre.com Email:: solutions@buildingequityre.com Phone:: 773.292.5188

Chicago Apartment Building Outlook For South Shore Neighborhood

Apartment building values in Chicago's South Shore neighborhood peaked in 2005-2006 at $55,000/unit.  Today these buildings are trading on the low end at $10,000/unit and the high end $30,000/unit.  Talk to active South Shore investors and the name of the game is all in for $30,000/unit.  You can buy a vacant apartment building at $10,000/unit and put $20,000/unit into the building.  Or you can buy a brand new apartment building for $30,000/unit.  At Building Equity RE, we believe we're bouncing at the bottom of the market with a potential for South Shore values to decline another $5,000/unit.  Investors looking to buy apartment buildings in Chicago's South Shore neighborhood can take the plunge now.  Be patient while looking for the right deal and look for well managed buildings with a solid tenant base.  Make sure collections match rent roll.  Call BERE for more details.

		Peter Lynn & Dan Rosenberg Building Equity Commercial Real Estate Web:: buildingequityre.com Email:: solutions@buildingequityre.com Phone:: 773.292.5188