April 29, 2010
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!
April 21, 2010
RISMedia recently ranted the top 300 firms in the nation – A Chicago standout at #13 was Baird and Warner in Chicago. Called the 2010 Power Broker Report, it is based on an evaluation of over 1200 real estate brokerages around the country.
According to a spokesperson – “B&W moved up five places from our previous 18th place ranking, thanks in part to more than 1,000 additional transactions year-over-year. We were also the only brokerage in Illinois this year to crack the top 50.”
RISMedia’s Annual Power Broker Report and Survey has been used for 22 years as a leading reference and referral tool by the nation’s top firms.
The report ranks the leading companies by transaction sides & annual sales volume. It also includes important company information such as number of agents and offices, as well as year-over-year comparisons, stats by metro market, companies to watch and more.
April 17, 2010
While Chicago has its share of luxury Italian dining (think Spiaggia , or Pane Caldo in Chicago’s Mag Mile ) grab a cab sometime to a few”out of the way” Italian places for top notch homemade Italian dining that’s worth twice the price. Or more! I recently dined at two of my favorite Italian “joints” - RoSal’s on Taylor in Little Italy and Il Vicinato on Western Avenue near the “23rd and Oakley” neighborhood. RoSal’s is a classic Italian restaurant, an old two-flat converted for dining, with a TINY kitchen producing some of the best veal and pasta you’ve ever tasted. It’s the type of place where they’ll come and top off your wine glass or bring you a little anisette after dinner just to be nice. Il Vicinato is even more off the beaten track, and is definitely an “old school” place. But both these places are my secret weapons to impress out of towners and locals alike. Especially on a weeknight when there are no crowds to speak of.
They’ll think you know all the secrets of Italian dining in Chicago. Which, of course, I do.
April 3, 2010
So, now that we know about cash flow and depreciation in 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 one ).
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 presumably more) rent off the property. So in a simplified world – if you hold on to 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. 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!