John D Ambrogio

I just had the privilege of attending the media event for Raging Waves water park - Names best of the midwest by Midwest living Magazine.  It opened a few years ago and now boasts 18 water slides, a wave pool, and a very courteous staff!  It’s located in the far western suburb of Yorkville - a good hour plus from the city, but an easy trip from such transferee destinations as Naperville, Aurora and the Fox Valley neighoborhood. 

Finding something special to do with kids, especially during a relocation, is always important.  This is an easy way for the kids to have a fantastic day while the parents relax in a friendly, safe, fantastic environment.  Believe me, I’ve been to a lot of waterparks, and this one is tops.

The top endorsement came from my seven year old - “It’s really cool, thanks Dad.” 

Who could ask for more?

John D Ambrogio

Forbes Life recently ran an editor’s note entitled “Credit Worthy” by Gary Walther. His points were intriguing - why, as the Dow takes a dive, does the interest in luxury lifestyle often rise? Yes the wealthy will always have money and now is an incredible buying opportunity, especially in Chicago Luxury Real Estate.  But the article had some interesting other points, particularly that price is not the essence of luxury, it’s a by-product.

So maybe it is more of the craftsmanship than an overinflated price that makes something “luxury.”

Don’t fixate on the incredible price tag that comes with some of Chicago’s luxury developments - if you’re in that price range look at the things like views, craftsmanship and upgrades. Spend the time to determine what luxury is - quality construction, careful attention to detail, etc.  

Luxury is not your possessions, it’s your lifestyle!

John D Ambrogio

How do you get people to search for your home when the searches “foreclosures” and “search free foreclosures” are at historical record highs?  Information published by both Hitswise and The Wall Street Journal indicates that those searches have reached their highest levels in years. 

Well, while less people are searching luxury real estate  these days, those who do are serious about buying. So the same rules apply - make sure you have descriptive listings of your property; use a Realtor who will promote your listing with e-blasts to potential buyers, agents AND potential buyers.  Also make sure the have a luxury real estate network affiliation that can help drive those buyers to you.  Those buyers are still out there, you just need to know how to market to them!

www.luxuryportfolio.com

John D Ambrogio

Some comments from our resourceful intern, Maija - This is the time when many people are pondering over whether to buy or rent a property. While great amount of prospective buyers are deciding to rent there is also some encouraging facts that support buying. Forbes Magazine just published an article Ten Cities To Go From Renting To Buying where top10 areas to buy are listed. It’s definitely good news for Chicago relocation as we can be found in the third place.

In short, think how much money you pay for your rental and compare it with the amount you’d pay for mortgage each month. At the moment the premium is way smaller than the average of the past 15 years. And the areas that made to the top 10 are the places home prices are going to climb the most in the next 5 years according to Forbes.

Basically this means that in these areas it is cost-effective to buy a house instead of keep paying rent. Maybe it is a good time to upgrade — especially since many of the prospective buyers could benefit from the extended first-time home buyers’ tax credit.

John D Ambrogio

Per our fantastic intern - Maija Harjula:

Chicago real estate VP of Strategic Development for Baird & Warner -  John D’Ambrogio  - was recently published in the February issue of Mobility Magazine with his article Losing sight of Corporate Culture – Securing Your Brand in a World of Mergers, Acquisitions and Recession. John’s piece offers perspective and insight about corporate culture and the value of a good brand in the business world. The article is also conveniently available online.

In the 21^st century branding has become an even more important part of corporations and their operations. In the article John discusses brand value and ways to keep it, or earn it, in a remodeled business world challenged by mergers, acquisitions and recession.

Take moment of your day to read the article to hear John’s view on branding and the importance of it!

John D Ambrogio

So, now that we know about cash flow and depreciation in Chicago luxury investment property - what about capital repayment and appreciation?  Everyone knows the latter (isn’t that why we’re in this current crisis?)  But many people forget the obvious advantages of the former!  Back to our earlier post about $3000/mo. PITI and a $5000/month in rental income - let’s forget for a moment about the obvious profit (and tax liability) there.  Let’s remember the REAL point - Someone else is paying your PITI (principal, interest, taxes and insurance)!  Obviously you have a down payment being tied up and not earning (or losing) money in equities or other investments, but the money in / money out is being taken care of by your tenant.  So while they’re not gaining any equity - you are.  There are thousands of amortization tables out there (try this). It may only be a few thousand dollars in the early years (interest is always somewhat front end loaded) but in the course of thirty years - guess what - someone paid off your investment property! And each year you’re receiving the same (or presumable more) rent off the property.  So in a simplified world - If you hold this property for thirty years charging $5,000/mo in rent at the end of thirty years you’ll have no mortgage and a cash flow of something in the arena of $60,000 annual income on the property.  And you never (hopefully) went “out of pocket” to pay it down.

Now it won’t be that simple of course, but capital repayment is probably the most overlooked of the ways to grow wealth in luxury real estate investment.  The final way, appreciation, is self explanatory, except for one thing that everyone has forgotten - the antonym: depreciation.  The good news, however, is that over a long term hold period you are historically (almost) guaranteed some appreciation.  Just don’t bank on it the way everyone has in the past.  Look at the four factors, invest wisely, and someday you can kick that tenant out of that luxury rental and move in yourself - rent free!

“But you must pay the rent”

John D Ambrogio

My longtime colleague Jim Kinney was interviewed today for Mary Umberger’s real estate colum in the Chicago Tribune.

In it she describes (as your humble author has done many times before) that traditionally the “spring season” starts the weekend after the super bowl (some big football game, I’m told).  However, given the unique market situation in Chicago and other parts of the country, she feels that we’ll be starting a bit early this year - She quotes Kinney ( vice president of luxury home sales for Baird & Warner  ) as saying “We’re going to see a lot of property coming on the market; we’re going to see everything that people took off the market in the fall, knowing they were going to be back in the spring in order to qualify under multiple-listing service rules as “new” listings” (a little trick realtors play on a regular basis).

Kinney still warns us about, as Mary Umberger puts it - the “danger in relying too much on what the guy down the street is asking.”

Kinney adds - “An awful lot of listings are wrongly priced. If people use those as a guidepost, they could get into trouble. Do a combination of historical data (houses sold no longer than six months ago) and looking at who you’re competing against, once you’ve determined whether they’re valid prices.”

I’ve known Jim for a decade and he’s been pricing properties correctly for more than twice as long.  Have a listen to what he has to say…