There’s three ways to make money by investing in condominiums:

1. Lease the property at rents that exceed the cost of owning the property.

2. Buy the condo with the intent of renovating it to substantially increase the value, and then sell it quickly.

3. Find condos or townhouses that need to be liquidated quickly at a large sacrifice to equity.

In a perfect market, an investor can acquire condominiums and immediately sell them for a substantial profit. Essentially, these three concepts have made more multi-millionaires than any other type of venture. Why not? People buy and sell real estate with little or no money down constantly, and real estate has always been a much safer investment than putting money in the stock market.

However, in this ‘bear’ housing market, the scene is flooded with condos for sale. It’s not as easy to make money as it used to be. But how about tweaking the rules above to better fit these current market conditions? After all, isn’t it a great time to buy a condo in this city (or almost anywhere in the country, for that matter)? Condo prices are looking to come over the hill and start falling soon. So:

1. Use the current buyer’s market to buy a condo for a fraction of it’s original sale price.

2. Wait until market conditions flip, and they will, they always do. This would be a good time to rent the place out or spend some time renovating it. Rent it.

3. In next year’s seller’s market, sell the condo for a profit.

This will take a little research on your part - you’ll want to find the ideal location for renting a condominium - and you’ll also need to make sure that property values in the area are generally on the rise.

It’s all about patience; the second of the former three rules says to “Sell it quickly,” but you’ll need to wait out this current market.

Technorati Tags: Chicago Condos, investment condos

Negative amortization: A method in which the borrower pays back less than the full amount of interest owed to the lender each month. This shorted amount is then added to the lump sum owed to the lender. This allows flexibility in packback of the home loan.

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If you’ve opted for an ARM (adjustable rate mortgage) in the past few years, chances are your initial, “teaser” interest rate was pretty low, probably somewhere around the 2% mark (over the last 2 years, homeowners have taken out over 1.2 million ARMs below this rate). But the “teaser” likely only lasts for a couple of blissful months at the most. After that, the rate of the mortgage adjusts to the current market: a 6% rate. Or a 9% rate. That’s a giant jump. Some could even end up with a loan balance that is larger than when they started:

“…because the initial teaser rate is a “payment rate,” not an interest rate. That means the market-rate interest on the loan starts to accrue from the get-go and monthly payments aren’t enough to cover it, let alone pay down any of your principal. (money.cnn.com)”

This means payments that start out at $1,000 may suddenly balloon to $3,000. If the homeowner can’t make up the balance each month, then it’s added to the overall balance of the loan. You can see how this could be a problem for many people, even those who attempted to refinance their loans with a low-rate ARM.
According to the data, 23% of those 1.2 million ARMs have negative equity now - which means the value of the home is less than the amount owned in loan paybacks.

It’s very important to consider this phenomenon when applying for an ARM, even if you’re refinancing. Those without negative equity can opt to switch their ARM for a fixed-rate mortgage in hopes of getting a lower monthly payment.

Technorati Tags: Chicago real estate, Chicago mortgage

I take it you’ve heard it’s a full-blown buyer’s market in Chicago. If you haven’t, you’re probably not currently in the market to sell a home. Realtors are telling sellers to make sure and price any property reasonably, and this is good advice. However, before you put a condo on the market, you should put some thought into it first - and really try to impress a buyer with your condo.

Try to make the unit look unique. In this market, choices for buyers are virtually limitless, so the more distinct your condo is, the more likely it will impress a prospective buyer. A little extra decorating doesn’t hurt. What I like to tell people is this, “Pretend your boss is coming over to stay for a year.” Stock bathrooms, living rooms, and the kitchen with extra amenities. If anything in the condo is in less-than-new condition, you may want to think about offering a buyer credit to fix or replace the item. This way, you won’t have to make any guesses about a prospective buyer’s tastes.

Don’t try and make the unit look sterile, however. Emptying closets, for example, can send the wrong message to a buyer. Make it obvious what every room in the house is used for, even coat closets. If you’re lucky enough to have a condo with a nice view, show it off. Make it easy for them to imagine enjoying the view. This may involve some furniture adjustments. Put a chair directly in front of that view. Make it an obvious asset.

Make your condo a showroom. Help the unit speak for itself, price it reasonably, and you’ll have a good chance of selling your condo. But before you do anything, be thoughtful of the space. Don’t rule out hiring an interior decorator. In this market, you must be competitive.

Technorati Tags: Selling a condo, Chicago condos