Friday, August 27, 2010

Modern single family home conversions in Lincoln Square



Located just two blocks north of the Lincoln Square retail and entertainment district, 5044 N Oakely pictured above was a two-flat building just sold in September 2009 for $305,000. A bargain for the neighborhood on almost any fee simple property. The lot is smaller than standard (25 feet x 112 feet), but still... great deal!

Here we see the "after" shot I took last week. It looks like a near finished conversion to a single family home. The new owners are doing a really terrific job adding contemporary elements to a pretty bland and ubiquitous structure. The interior was opened up from front to back. I have not seen inside other than from passing by on the street, so I can't tell if any one's living there yet.

My guess this home is a custom conversion for the current owners as it's still not for sale almost one year later.

If speculating on a 25x112 lot in this location: If you were to do a nice job on a true four bedroom conversion, a realistic listing price of $649K can move it and make a little money. Let's take a look at quick, broad numbers:
The highest priced home to sell on the four block stretch in the past 12 months was a bank owned new construction five bedroom (three bedrooms above grade) at 5052 N Oakley for $685K. It still needed some finish work and appliances. But there was also a renovated three bedroom re-sale home that closed for $605,000 at 5119 N Oakley. I think this house at 5044 N Oakley, if listed for sale, should easily catch in the middle of those two comparables on the street.

If you bought 5044 N Oakley at $305,000 and put down 20% ($61,000) plus $200,000 in renovation costs, you'd be all in $260,000 for the project. Adding the payoff of the mortgage, you are looking at $500,000 all in. You can probably put down less money, but let's say the bank requires 20% because it's an investment. I'm confident if you put $200,000 into this two flat conversion to a single family home, you could re-sell conservatively at $600,000. After 5% commission to real estate brokers and closing costs, you'd come out around $65,000 profit or just under 30% on your investment.

I think a professional team could, after all renovation and carrying costs, clear over $75,000 profit and make 30% on the initial investment ($260,000 investment). Lincoln Square just north of Lawrence Avenue and west of Westerm Avenue is home to many beautiful single family homes. Converting two flats to single family homes had been popular during the boom for speculators. Now, with two flats selling at lower prices, many home buyers are purchasing and converting two flats for their primary residence.

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