OTHER PEOPLE’S MONEY = DREAM HOUSE

OPM.   Other people’s money.   A creative and realistic way to buy into a real estate market that’s still in recovery but appears to have a favorable prognosis.   The two-flat (not to mention three- and four-flat) concept is hardly new and has long been a practical strategy for first-time homebuyers to get into homes and neighborhoods they otherwise could not.   The contribution that other people, your tenants, make to your monthly mortgage payment can be significant.   OPM just might just help get you into a three-flat in your dream location of Andersonville.   OPM might be the boost you need to become the owner of a two-flat surrounded by old world charm in the continually evolving location of Uptown Chicago.

A silver lining of the recession:     Unbelievable opportunities for home buyers.     Now is the time.   Check out listings in Lincoln Square, where you’ll find a true buyer’s market.  In Lincoln Square, the median price of two- to four-flats was $360,000 in the second quarter of 2009 (down 15% over the same time in 2008).  Uptown prices, at a median of $492,000, experienced a 5% reduction in the second quarter of 2009.   The Ravenswood neighborhood, whose boundaries overlap Uptown and Lincoln Square, also offers a great selection of two to four-flat dwellings.   In the lovely Edgewater neighborhood, which contains high-demand Andersonville, the median home price is $560,000 (11% less during the second quarter of 2009 than during the second quarter of 2008).   In Lakeview, median prices are $575,000 (22% less in the second quarter of 2009 than in that same period a year ago).

For landlords who prefer clean hands, mortgage money saved through use of OPM might initially go directly into repairs and rehabs.   That’s where knowing your neighbors comes in. Networking with your new neighbors during a summer event in the park, for instance, could yield a list of potential trades people for the projects you’d rather not tackle yourself-or perhaps yield advice on tackling the do-it-yourself projects you can’t wait to begin.   Everyone has a stake in the neighborhood, after all.  Your neighbors want you to succeed and beautify the area as much as you do.   Perhaps you bought the one diamond in the rough on the block-another creative way to buy in challenging times–which means less up-front dollars to purchase, and often the changes needed are relatively inexpensive cosmetic ones that you can do yourself over time-painting, removing carpeting, updating fixtures.   You might find you love home improvement so much that, once you have this place fixed to your taste and enjoy it for several years, you could use the equity built in it to borrow against for a second property to rehab and rent out.   The sky is the limit.

The unusual events of the past few years, with the eventual burst of the real estate bubble, left not only buyers and sellers but even seasoned real estate professionals questioning the truisms of real estate.   Fortunately, not only has the turbulence been settling, but we are also seeing a return to concepts that have always worked well in the past-one of the strongest being the multiple-flat concept.

The multiple-flat concept that has always helped first-time and next-time homeowners in the past is being revisited today in a significant way.   The advantages just can’t be dismissed. Traditionally, real estate has tended to keep pace with inflation and is a wise investment that in the long run withstands economic turbulence.   Nothing beats the tax advantages of owning property–particularly income property.   You have more control over your investment.  You make the rules. You decide how ambitious you want to be.   You use OPM in addition to your own income to get where you otherwise might not be-whether it’s a location you couldn’t otherwise afford or having amenities and improvements you couldn’t otherwise have.   Real estate remains one of the best and safest investments you can make.

As for OPM, if you take care of your tenants, they’ll take care of your property.   If you’re really lucky, they will leave the place looking nicer than the day they moved in.   Minimize your risk as a landlord by screening your tenants with background and credit checks.   Again, networking with neighbors is an effective marketing strategy to increase your chances of finding tenants who will treat your property as they would their own.

Imagine what OPM can do for you in the high-demand Chicago neighborhoods of Andersonville, Lincoln Square, and Ravenswood, where you’ll find a fabulous inventory of two and three-flats to begin-or continue–your homeownership experience.

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