How I Got a Good Deal on a 2-br in a River North High-Rise

Months Free Mike crushed his search for a 2br apartment for his girlfriend and himself and was rewarded with a good deal on a brand new 2br unit in a River North high-rise. He quickly learned where to find value in the Chicago apartment market and how to effectively use Chicago’s brokerage intermediaries.

What’s your personal situation, dude?

I recently finished grad school and my girlfriend and I are moving in together for the first time. We’ve both been around Chicago a while and have lived all over – the Loop, Lincoln Park, Gold Coast, Wrigley. We plan to stick around Chicago and are looking for a place to live for a couple of years while we save for a down payment on a house.

What specifically were you looking for in your search?

Our ultimate criteria were as follows:

  • 2br
  • High rise with doorman
  • Quick commute to work (we both work in the Loop)
  • No more than $2,000/mo per person

Why a 2br if it’s just you and your girlfriend?

The issue we found with 1br units was closet space – My girlfriend doesn’t seem to wear the same outfit twice and I have a small U-Haul’s worth of blue suits and white shirts, so your typical 1br closet situation just wasn’t going to fly. Wow – Saying that aloud makes me question our priorities.

Yeah dude suggest you think that through. Anyway, why’d you want to be in a high rise with a doorman?

Security and amenities – I work very long hours and my girlfriend will be coming home by herself, and we both wanted a pool and a gym. Impossible to get these attributes outside of a high rise.

How do you feel about apartment hunting in general? Do you think you’re good at it?

I don’t particularly enjoy looking at apartments, but I enjoyed the search because I felt like I did a good job of it and that I maintained control of the process. A big advantage I had is that I searched between finishing school and starting work and therefore had a lot of time to be thorough and patient.

How’d you get acquainted with the market?

I started with Craiglist (Padmapper, mostly, which is Craigslist reformatted). Using Craigslist can be a real drag because 1) It’s not particularly user-friendly and 2) Many of the listings are essentially fake listings displayed by brokers looking to attract new clients.

I think the upside to Craiglist’s challenges is that there’s value to be found on it. It’s still the website where you’ll find the largest volume of listings, but the “sketchiness” of the craigslist experience seems to scare some people off. Also, it’s definitely the largest internet repository of owner-listed apartments which seem to be the units most likely to be mispriced.

How early did you begin your search?

For my Sept 1 lease I started looking in mid-June. I definitely got a very early start, but I realized that many of the high-rise buildings were marketing empty apartments and that I didn’t need to wait to sign a lease that far in the future.

In my experience, buildings start receiving word of August 31 move-outs around the beginning of July.

Where did you search and how did your thinking evolve with respect to location?

I started with a very broad search area looking initially in Wicker, West, Loop, Lincoln, Gold Coast, Streeter, and Old Town. After about a week of looking I narrowed my focus to Old Town, Gold Coast, and River North because my girlfriend and I decided we wanted a high rise and that’s where most of those sorts of buildings are located.

Where in the market did you find value?

The biggest surprise was that there seem to have been a number of high-rise apartment buildings either completed during the past year around River North or nearing completion. The companies managing these buildings are just trying to fill their apartments and are often willing to discount their list prices aggressively to their first tenants. I guess it’s econ 101 – supply is up in this category, and demand hasn’t changed commensurately.

We had particularly good luck looking at places that are less than a year old – they’re nowhere near full right now and are willing to work with you on both rent and on start date. We found buildings in our target neighborhood that fit this profile.

So is that how you were able to sign a lease well in advance of your start date – by signing up as the first tenant in a new building?

Yes. These companies know they’ve built great buildings and I assume they’ll do great long term, but for now they’re just trying to fill units. They’re particularly excited if you’re willing to sign a multi-year lease.

Where did you end up renting, and why?

We settled on NEXT Apartments on Orleans St in River North/Near North Side. The apartment and the building has everything we want at an all-in cost that’s lower than the other high-rise buildings we considered. NEXT is a new doorman high rise close to work for both of us with great amenities, but the unit we’ve rented is also just bigger and nicer than the apartments we saw in competing buildings. It also has a “house dog” which is cared for by the building but available for walks with tenants. That dog pretty much sealed it for us.

Our only item of compromise with NEXT is location – the building is just north and west of River North proper and the area – while safe – isn’t much of a neighborhood. We’ve sort of solved for this issue by renting a unit facing downtown, so that when we look outside we feel like we’re right in the thick of things.

Where’d you land on rent, and how did you manage the negotiation?

Like all new high-rises we looked at, NEXT was willing to offer us both months’ rent free and straight rent discounts. We assumed there would be a negotiation with building management, but there was actually very little of it. Management seemed to have figured out exactly what it was willing to offer tenants depending on lease length, and these terms were offered to us by the leasing agent the moment we asked whether the building was offering any discounts.

Here’s how the lease shook out for us:

  • Length: 24 month
  • Rent: $3,300/mo
  • Months’ rent free: 2
  • Security deposit: $0
  • Application fee: $50 credit check fee per person, $450 application fee that’s credited towards rent if you apply within 2 days of seeing the place for the first time.
  • The apartment was listed for $4,500/mo, but we received a discount to $3,300 in exchange for signing for 2 years rather than 1.

All things considered, our effective monthly cost over the next two years including utilities should be a little over $3,100/mo. My girlfriend and I consider this cost to be a good value and we’re happy with the job we did of weighing our desires for apartment characteristics versus what was available to us in the market.

Did you use brokers? How did you use them and what did you think of them?

We initially did not engage a buy-side broker and and saw our first 5 apartments on our own. We encountered a few sell-side brokers representing these properties, and our dealings with them were nothing out of the ordinary.

Where we found a ton of value was the brokerage company/website Apt Amigo. Apt Amigo deals exclusively with Chicago (for now – seems like they’re looking to expand to other cities) and is trying to be a combination of Yelp for apartment buildings and a traditional broker. They have a ton of tenant-generated content describing apartments arount the city which I found incredibly helpful. They also have human brokers who have relationships with the buildings listed on their site. The company’s hope seems to be that people will come to their website to learn about apartments and neighborhoods and then wind up using one of their brokers to rent a place.

My first interaction with Apt Amigo was telling them “Please show me all the buildings in Chicago offering months’ rent free,” and the company was able to show me a list of such places instantly.

After spending time on their website I signed up to tour some buildings with a broker and saw several units including the apartment we’ve rented. I’m not sure exactly how the Apt Amigo brokers are compensated, but it seemed like they may have been paid per apartment showing rather than lease signing because I felt absolutely no pressure from this guy to sign a lease at any of the buildings he showed us.

Sounds like these guys are a great resource. Do you have any other advice for Chicago apartment seekers?

Ha – yeah, I guess I would use Apt Amigo if I had to do it again. Great service. I’d also add the following:

  • Look hard at the numebrs and consider more than the top-line rent figure:
  • Sometimes months’ rent free can really reduce the effective rent.
  • Sometimes utilities can be included in the rental fee.
  • Can you walk to work? That can make for significant transportation cost savings.
  • Does the building have a gym? Maybe that saves you a gym membership.
  • Most importantly, make sure you know where you’re paying a premium and make sure you value the source of that premium
  • You’ll pay a premium, for example, for living in the heart of River North. Do you value highly a central location? If so, the premium might be worth it.

Thanks for sharing, dude!

 

 

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