For Sale

Here's the question of the day:

Do you think it's possible to purchase an investment property and give a shit about the neighborhood where it resides?




I'm confident that this property will be snapped up by some suburban investor who will soon renovate the building and rent it out.

If past behaviors are anything to go on, the units won't be market rate.

That may or may not be a good thing.

The building next door to this one was beautifully renovated the renters are seemingly good neighbors.

The scuttlebutt is that some if not all of the units are subsidized.

In the scheme of things, who gives a fig if the units are subsidized as long as your neighbors are decent people.

Some would say that building is an anomaly.

Perhaps the owners or property managers exercised proper tenant screening.

Whatever the case may be I will tell you this.

I'm tired of the fortunes of this neighborhood being tied to the whims and wishes of other people.

It’s The Fraud, Stupid

Since it’s an election year, I have a question for those who purport change.

When is our government going to get out of the business of subsidizing the hucksters that sap money from condo associations?

How?

It’s only a theory but one that bears repeating.

I don’t think it’s too long of a stretch imagining a person that would commit mortgage fraud would also attempt to defraud the government via a subsidized housing program.

Hell, let’s even take the mortgage fraud out of it since the many ways to defraud lenders and devastate neighborhoods has been talked to death.

Let’s just take this theory on it’s own merits.

Assume you have a landlord who owns a unit in a condominium association who applies for a subsidized housing program.

His or her unit passes the initial inspection, they secure a tenant and the payments from the government commence.

From the landlord’s point of view, everything is humming along nicely.

Now let’s throw a few “what if’s” in the mix.

What if the landlord ceases to pay his or her mortgage?

What if the landlord ceases to pay his or her monthly association assessments?

Now the playing field changes.

You would think that a vigilant board would be able to find out if a unit is subsidized or to notify the proper program officials that such shenanigans are taking place.

If you were a betting person, you’d be wrong.

Per current subsidized housing program procedures, unless you’re the client or the landlord, no information can be released.

And I suppose I understand the reasons for that rule.

The world is not a kind place. Let’s face it, there are those out there who would actively discriminate against clients of the program.

Frankly speaking, they’d be dumb asses to court disaster. Federal housing discrimination lawsuits are a bitch.

Nonetheless for a smart fraudster, that lack of communication----or gaping hole if you will---is a license to print money

You see my friends if that cagey trickster isn’t paying his or assessments but is still getting money from the government, how are you going to stop them?

Any attempts to reach out to the bureaucracy that is subsidized housing usually results with being talked to in very clipped, hurried tones.

You’re all but hung up on.

And I should know, I tried to tackle that maze myself.

As a result, the tricksters and fraudsters are potentially---yes I said potentially since I have no proof---getting away with bags of money on the taxpayer’s dime.

It boggles the mind that an individual can commit fraud, default on a mortgage, endanger a person’s primary residence, financially devastate a condo association AND drive down a neighborhood’s property value just like that (*finger snap*)

In a sense if fraud is being committed, one property could be yielding up to two revenue streams. One from the illegal (and inflated) proceeds and another from the subsidized housing revenues.

Now if the suspect landlord is engaging in these activities the mortgage company loses, the condo associations loses, subsidized housing dollars are being thrown out the window and more importantly the tenant loses.

It’s a big fat bag of ass for everybody.

So in this hotly contested election year I’d ask the candidates how they’d protect the interests of the tenants, condo associations and the public piggybank from assholes who are hell bent on taking all of us for a ride.

That’s the reform I’m interested in.

The Enemy Within

If you’ve been a loyal and regular reader of this blog, you already know that I have little love for “investors” who buy into our happy home.

Plus it just burns my biscuits that someone makes our home their commercial enterprise.

As an association we’ve had trouble with “investors” before and we’ve luckily got those past issues under control.

Yet there’s always one pain in the ass. One person who has to keep it interesting and not make any attempt to be neighborly or abide by the minimal rules we have around this joint.

Ms. Realtor is that person.

Ms. Realtor is an owner of a unit that she rented out in the past and now has placed on the market

From what I understand she owes the association in excess of $1,000 in back assessments.

I get being a couple months behind---hey, we’ve all been there---but over $1,000?

Might I add she owes us this money AND she had the place rented out for a while. There was no good reason why she couldn’t of paid her assessments.

Moreover getting any type of meaningful communication out of her is like hitting your head against a brick wall.

So if her financial shit was hitting the fan, she at least could of given us a “heads up” on the assessment tip.

We understand that people have drama in the money department from time to time. No one is immune from that.

But from what I understand we couldn’t even get an odd e-mail much less the money that we’re legally owed.

So now it gets ugly.

If there’s not a lien on the property one will placed on it soon enough.

And in the interest of disclosure, one association member even threatened to go to one of the owner’s open houses and let her potential clients know about her deadbeat ways.
I personally think that’s going too far---but she already put it out there.

Why waste your time threatening someone and have a potential trespassing beef to deal with when there are so many other effective ways to get your point across?

I’m sure there’s some type of ethical violation that I’m sure the state real estate licensing board would be interested in hearing about.

But then again, maybe not; who knows? I’m sure someone is investigating that angle.

You see our bills can’t wait until the property sells in order to collect our money.

I can’t speak to Ms. Realtor’s motivation for not paying her assessments but in the past, when we’ve found ourselves in this same situation we’d often get the “We’ll pay when the property sells” line.

Well that’s all fine and well until no one has any hot water to shower with because People’s Energy hasn’t been paid.

But investor’s don’t worry about that because they don’t live here.

Past experience has also taught me that the people who try to take advantage of us usually tend to look like us.

Or at the very least they’re people of color.

Our developer, the deadbeats, Maurice Cousin---all the people who broke dirty with this association happened to be black.

Sorry to get all Bill Cosby and air out our laundry but---if you’ll excuse the pun---let’s call a spade a spade.

While I could go on forever about black on black relations, it’s easier to compare it to Don Imus getting fired for calling the Rutgers women’s basketball team a bunch of nappy headed ho’s and Isaiah Thomas explaining in a deposition when a black man refers to a black woman as a bitch it may be less offensive than a white man referring to a black woman as a bitch.

We’ve swatted down a whole bunch of Isaiah’s in the past, I hope Ms. Realtor doesn’t turn out to be another.

I have seen the enemy and it is us.

Didn't I Just Say That

Chicago magazine (and frankly anyone with good sense) has also noted the damage done to property values due to foreclosures in "emerging" neighborhoods.

One way to minimize any condo association's risk is to lock it down and make it owner occupied only.

That's not to say that owner occupied units won't wind up in foreclosure, but it's my humble opinion that you'll be a little more motivated to save the roof over your head vs. saving the roof over your tennant's head.

I'm just saying...

The Gift That Keeps On Giving

It’s difficult to realize that despite all of your hard work, that there are some things you just can’t control.

Such is the way of the foreclosures in my association and on my block.

Despite the fact the process started over two years ago, the repercussions of those foreclosures linger like a bad stench.

I was surprised to see a much lower value for my unit once the appraisal came back last Thursday afternoon.

I cursed the name of the former owners in our association who only seemed to care about their bottom lines and nothing else.

After gulping down that big glass of haterade, I rallied the forces of good and countered with supporting comps of units that weren’t exactly like mine but provided a basis for a much higher appraisal.

An extra $40,000 is nothing to sneeze at.

As of this writing, the appraisal department has the paperwork and will render a decision in the next day or two.

That still leaves me and any other people in my association who try to refi or sell in a hell of a predicament.

Do we accept shit comps from someone who can’t even pull values from around the corner? Do we fight it and hope for the best or do you lower your selling price (and grab your ankles) as the market is still very much tipped toward the buyer?

So like the nice article said, do some homework prior to plunking down your hard earned cash for a place.

If you’ve got a high number of foreclosures and investors with rental properties you may want to steer clear or have a diamond in the rough. It all depends on your outlook.

Let’s say you’re only going to stay for a short while or you’re not the type who’s not into community involvement.

My suggestion would be to head for the hills.

You’re the type of person who wants a ready made hood. A neighborhood with bright young things strolling the boulevards, people with good dental plans, shopping, nightlife and all of that jazz.

And if you have the money, and some do, head for one of the many neighborhoods in Chicago that will fulfill your urban desires.

But for those of us with Tiffany wishes in a Jewelry Exchange world, we have to look elsewhere.

If you are the type who can make a dollar out of fifteen cents and plan on staying put five years or longer, an “emerging” neighborhood may be for you.

You may not have the fabulousness of the ready made hood and you won’t have grocery store anywhere around you, but eventually you will be thought of as the forward thinking type as you had enough foresight to see potential.

Kinda like Gloria Estefan before Emilio got to her.

After all, anyone with money can buy fabulousness; it takes a special breed of person to make fabulousness.

You, my urban pioneer, can consider what type of new construction is (or may be) happening in the neighborhood over the next few years.

While prices may be depressed now, in a year and a half to two years, its gonna be a whole new ball game.

How so?

For those of you who don’t know, real estate appraisal comps are comprised of what has recently sold in your neighborhood or in my case my building and my neighborhood.

Because of the low selling foreclosures in my building (a 2 br for $108K), and three other low selling foreclosures down the block (on average $130K a piece) I should have anticipated that I would have trouble.

Had my appraiser simply taken into consideration the recent sales of the condos around the corner I’d have a whole different ballgame.

Now I don’t have all of the bells and whistles that the units around the corner have (stainless appliances, granite, half bath or parking space) but according to a friend’s calculations that should of only knocked my appraisal down $20,000---not $55,000.

But on the bright side when the proposed developments behind me either get built or sell, real estate in east Woodlawn is quite literally going to go through the roof.

That will take about two to three years to happen, but I’m not in a hurry.

I’ll simply continue to make improvements to my unit so it can be on par with my new neighbors.

If You Don't Believe Me...

If my examples of our condo's growing pains with investors haven't been enough, perhaps you'll believe it from our friends at YoChicago.

The Appraisal

There's a reason why all of the little things matter.

High foreclosure rates paired with too high a number of rental units equals appraisal disaster. At least it did for me when I got an appraisal last week as a part of my refi of an ARM mortgage.

You see I was one of those people who actually paid attention to the fine print.

I actually knew that my mortgage payment would be adjusting in May and didn't want a $350 surprise when I went to pay my June mortgage.

So I investigated rates and the like with my current mortgage holder, decided that they were smoking crack as there terms were nutty; and choose to look elsewhere for reasonable financing.

I found a lender (my bank) and everything has gone through with flying colors until we hit a small stumbling block called the appraisal.

The appraiser and I don't exactly see eye to eye on the value.

In fact, there are 55,000 little reasons why we're not seeing eye to eye.

I know you're asking yourself, Woody---what the hell? How in God's name could there be that much of a disparity in what you think your unit is worth vs. what an appraiser thinks your unit is worth?

At this time and in this place the value of some Woodlawn real estate isn't too bright.

The real estate chickens have come home to roost. Foreclosures seem to haunt those of us who continue to live in a neighborhood long after the banks have taken over the properties.

Coincidence

You see my friends; my developer had greater plans in mind than just developing our building.

He also went ahead and developed an abandoned six flat down the block.

I can’t speak to the quality of work or the astuteness of the association.

What I can tell you is that a little over three years after its renovation & sale all six units have been foreclosed upon. The yard and the parkway are a weed choked mess and the lights in the hallways and foyers aren’t working.

Then of course, all of the light bulbs could have blown at the same time.

The association and the building didn’t stand a chance for survival as four out of the six units we owned by Ryan Hudson and Jamael Sanford.

Those names sound familiar?

Those are two of the four deadbeats who owned in our association. If their track record with us severs as any indication, it would stand to reason that the assessments weren’t getting paid at the six flat down the street as well.

As a matter of fact, the new owners didn’t even have the presence of mind to get their tax bills taken out of the name of the original trust that they bought the units from. So all of the tax bills were being mailed to the incorrect address---brilliant, huh?

Seeing that the building was a vacant wreck prior to it’s development and that it will further deteriorate into a vacant wreck now that all six units have been foreclosed upon, smart money says that for all of the “development” that happened it should have been left alone.

Despite the fact it’s a smidge easier on the eye, the circumstances of both the building and neighborhood are still the same.

The only thing that happened is that my developer and a whole bunch of “investors” got paid.

My developer got paid when the units sold; the investors more than likely got paid courtesy of CHAC and the housing voucher program as I suspect that the building was 100% rentals.

Then of course I could be wrong.

The only thing the neighborhood got was an eyesore and more foreclosure stats to add to our zip code.

Do you know how difficult it will be to attract good quality neighbors in a high foreclosure zip code? No matter how much you like the neighborhood, if a bank won’t loan to you because of the foreclosure numbers you have no other choice but to look elsewhere.

Without solid demographics, retailers won’t relocate stores to the area.

Without stores, yours truly has to continue to schlep 22 blocks south and 19 blocks west on public transportation for groceries.

I think that’s roughly about five miles for food and personal care items.

Did I happen to mention that I don’t have a car? It’s either lefty and righty, the CTA or sympathetic friends who provide the bulk of my transportation.

I’ve become a wiz on what you can put in a backpack or wheeled shopping cart.

What I have to do to have a garden each year no person should have to go through.

Nonetheless I’m sure you get my point.

That’s why I was so upset when I heard that my developer was taking on another project in the neighborhood.

While I fully realize that he cannot be held responsible for the actions of the unit owners once he sells his inventory, I don’t think it’s a coincidence that Ryan Hudson and Jamael Sanford wound up owning down the street in another building rehabbed by my developer.

Then of course, fate does work in mysterious ways.

Anything’s possible.

Pay What You Owe

Through the course of this blog I’ve documented my feelings about non-resident owners.

In the scant time I’ve lived in this association we’ve gone through foreclosures, deadbeats and a variety or renters.

Even though I can’t get into specific details, let’s suffice it to say that matters are being handled and old business is being taken care of.

But that leaves us with the current crop of newly minted pain in the ass owners who purchased the foreclosures.

They’re otherwise known as mortgage companies. Their local minions are known as property managers.

So now we’re doing the “pay your assessment” dance with the property managers.

Dig this---we’ve now got one of the mortgage company owned units that now owes over $2,200 in back assessments and late fees.

Trust me, my jaw was on the ground when this little bombshell was dropped.

Seeing that I thought we had a strict 45 day delinquency policy regarding assessments I wasn’t quite sure how the total got to be so sizeable.

The ball got completely dropped on this one.

Naturally, I informed the property manager about this arrearage and forwarded them an e-mail detailing the breakdown. When I called to follow up on when we would be receiving payment, I received a non-committal “I don’t know.”

I wanted to make sure that the person I was talking to and her boss understood that if a check for the full amount isn’t received by April 5th that a lien would be placed on the property.

Not only did she tell me that she understood but proceeded to tell me that “usually these things” get settled at the closing table.

I explained to her that our bills aren’t on Litton’s (the mortgage company owner of the unit) time table. They are quite real and have to be paid in a timely manner by or before their due date.

The only response I received was, “We can only pay what the client authorizes us to pay.”

Whatever, sister.

I promise you good folks this, if our association treasurer doesn’t see a check for the full amount on or before April 5th, this matter will be referred out to our attorney.

Once it’s referred out---it’s a done deal. You’re getting a lien slapped on your place.

And that bad boy ain’t coming off until someone coughs up some cash.

Three Blind Mice

The three non-resident unit owners that are in foreclosure are a curious lot.

From the information that I’ve been able to dig up I can see that they’re all relatively young and they all live in the south suburbs.

The only other common thread is that they either bought units with existing CHAC renters or purchased units that they soon enrolled in the CHAC program.

For those of you not familiar with the CHAC, it is a subsidized program that assists low income and moderate low income families with paying their rent.

My point in bringing this up is that coming up with money to move is a daunting task for some people. Whether you’re laying down a deposit---hiring movers or just having your friends help you out, the cash outlay can be financially draining. I can imagine that coming up with money to move for renters that take part in a federally subsidized program may have posed its own special set of problems.

Additionally, if you want to stay in the Housing Voucher program you have to physically go down to the CHAC office during there regular business hours and request moving papers. Then you have to actually find a landlord who will take the voucher for your rent. From what I’ve been told choice affordable housing is difficult to find. With seemingly every apartment building going condo, moderate and low income renters are increasingly getting squeezed out of neighborhoods and in some cases the city itself.

Obviously our three non-resident unit owners don’t understand the difficulty of such matters because if they had, they wouldn’t have just stopped paying their mortgages and monthly assessments.

As far as I’m concerned, their lack of fiduciary responsibility all but displaced the renters in those three units.

Owner #1---Ryan Hudson is being sued for foreclosure on 13 different properties.

Owner #2---Jamal Sanford is being sued for foreclosure on 5 different properties.

Owner #3—Akwetee Butler is being sued for foreclosure on 5 different properties.

Skeptical? Think I’m giving you the business? Plug those names into the on-line case info link for the chancery division and look for yourselves.

I’m simply amazed not only by the scope of the foreclosures within our association but the number of other small and mid-sized associations that are also losing assessment monies.

It’s simply mind boggling.

As we all know, heat and light bills just don’t get paid by wishing it so.

More importantly, people’s lives and shelter is being affected. One day you think everything is fine and the next you realize that your home has a new owner and they want you out of there.

While I’m not a big fan of rentals in a condo association, as long as we have to have them the renters should be treated with the same respect that every other resident receives. I can’t think of anything more disrespectful than some rock head’s fiscal irresponsibility putting someone out of their home.

For the record, we had more trouble with the absentee unit owners than with the renters.

It's Just An Investment

I’m of the personal opinion that non-resident owner-investors are a pain in the ass. They don’t want to be your neighbor, they don’t want to break bread with you, and they don’t want to make the tough decisions regarding the well being of our home.

They simply look at their unit in the association as an investment. Not a home---an investment and they treat it like one.

The only time they seemingly come out of the woodwork is when assessments are going to be raised or to vote down spending any money for improvements in the building.

Like I said, pains in the ass.

Unfortunately for us, our association has had four such people already own several units in the scant time we’ve been in existence. As of this writing, three of the non-resident owner units are in or have gone through foreclosure.

I shit you not.

I alluded to the foreclosures in a previous post but now I need to give you the real skinny so you completely understand the situation.

This calendar year our association has had a total of four units foreclosed upon. Three of them were owned by non-resident investors and the last one is owned by a guy who simply stopped paying his mortgage. The three individual owners were the second generation owners of those units. Our developer wanted to get rid of the last of his stock and sold three units to a single investor who after a year sold it to the three other individual yahoos who are presently being foreclosed upon.

Did I happen to mention that when the first owner sold his units, he neglected to pay his back assessments upon closing? Or at least that’s what I was told by someone who was on the board at the time. Then of course no one could prove any financial wrongdoings since we don’t have complete financial records or bank statements for any year that our association has been in existence except for this year.

But I digress…

I’m sure you’re asking yourself how in God’s name could one association have the stunning bad luck to have so many foreclosures? How could people just stop paying their mortgage?

Well folks it gets better.

Not only did these knuckleheads not pay their mortgages, they also didn’t pay their assessments. These four individuals combine to owe us over four thousand dollars in back assessments.

Four large, four g’s---anyway you put it; it’s a lot of money for a cash strapped condo association.

Repeat after me, “Investor owners are a pain in the ass.”

The new wrinkle in this ongoing soap opera is that several of my neighbors are going to potentially get married and now want to either sell their units or rent them. Most don’t want the hassle of renting their units and managing tenants but our recently discovered electrical problem (don’t ask---you’ll find out soon enough) means that the units will be all but impossible to sell.

While I very much understand their plight, it leaves us with a great big riddle that no one can seem to solve. How do we keep our association from being overrun by rental units by owners who won’t or can’t sell because of the defects in the building?

I can’t believe I’m not in AA yet.

Building a Bridge and Getting Over It

When I was pissing and moaning about our building, I happened to read about a legal case that makes our issues look like child’s play.

Get this---a woman can’t sell her condo because an association was never formed by the unit owners OR her developer. The proper paperwork was never registered with the state and because four out of the six units in the building were owned by non-resident owners, they never got together to elect officers and fill out the necessary paperwork.

While I won’t make a stinging indictment of all non-resident condo owners who have renters; this type of behavior is increasingly being seen in my neck of the woods as investors buy up property in emerging neighborhoods. The units are cheaper and the condo Declarations and By-Laws tend to not to have owner occupied clauses so the unit can be rented out even before the association is turned over.

Since the developer was such a tool and didn’t do his (or their) part, it was left up to this unfortunate soul to attempt to organize the other owners. Much to her dismay, four other unit owners didn’t see it that way. She could only find one person to attempt to meet with. From what I understand, that isn’t enough to get the ball rolling on the formation of a board.

As if that weren’t bad enough, the developer was such an asshole, he simply stopped paying the utilities about the time the last unit was sold. Also note, he never turned over any of the assessment money that he should of been paying for the unsold units.

This woman not only paid her own mortgage and utilities, but also shouldered the bills for her building until she couldn’t do it anymore.

She lived through a Chicago winter with no heat, no electricity and no water.

Let’s all take a deep breath, imagine that scenario and officially get over ourselves.

I’m pretty strong and I’d like to think I’m also pretty resilient but I don’t know if I could even begin to tackle that problem. Jeeez…

Naturally she attempted to put her unit on the market and was greeted with yet another unwelcome surprise. She was told she couldn’t even sell her unit because an association had yet to be formed. Therefore, it legally wasn’t a condo---it wasn’t anything---it had no designation other than an apartment.

Can you believe that?

The woman is suing her developer and her fellow unresponsive unit owners in Cook County Circuit Court as we speak. The link to the case can be found here.

How did I stumble on this pitiful tale of woe? Simple, one of the jagoffs that was an unresponsive unit owner in her association also happened to own one of the foreclosed upon units in my association. In fact that gentleman who’s name is Ryan Hudson is being sued for foreclosure in fourteen separate cases.

Think I’m giving you the business? Read it for yourself here