Investor looks to flip 15 units at Lincoln Park 2550

Lincoln Park 2550. Photo from Trulia.

An investor who has agreed to buy 15 condominiums in a new luxury high-rise overlooking Lincoln Park is trying to flip them for $10.5 million, a sign that the great condo bust hasn't completely purged the market of speculators.

The investor has hired @properties agent Tricia Fox to sell purchase contracts for the 15 condos and 30 parking spaces at Lincoln Park 2550 even before closing on them. To sweeten the deal, the investor, whose identity could not be determined, also is offering to pay property taxes and assessments for a year after the sale.

“There are plenty of people looking to tie up capital right now, and there's limited inventory,” Ms. Fox said.

Ms. Fox is marketing the condos about six months after buyers started moving into the 39-story tower at 2550 N. Lakeview Ave. The building's developer, Ricker-Murphy Development LLC, still has to sell about half the building's 218 units, and competition from Ms. Fox's client won't make that job any easier.

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The client isn't the only investor trying to cash out. Another undisclosed buyer also wants to sell a portfolio of one-bedroom units in an "investor blowout" at the tower, according to marketing materials from Coldwell Banker agents Elena Frankel and Patrick Santry, who are handling the sale. The agents did not return messages.

The offerings are reminiscent of the condo bubble, when investors would quickly cash out of new condo towers amid rising prices and easy credit. Speculators all but disappeared after the crash, which caught many unable to sell their units as demand evaporated and prices fell.

Yet even during the boom, condo flippers sold one unit at a time, which offer higher returns than bulk sales, said Jim Kinney, vice-president of luxury sales for Baird & Warner.

“Even when the market was good, I never saw people doing bulk cash-outs. The money is more in the individual cashing out,” said Mr. Kinney, who is scheduled to close Friday on a nearly $2.2 million resale in Lincoln Park 2550 for a client who signed a contract for the unit before construction began.

Ms. Fox declined to say what her client has agreed to pay for the condos and parking spaces but said the contracts were signed before construction began. Asking prices have since risen at the project, allowing the investor to price the portfolio at $700,000 per unit, or 30 percent below current listings marketed by Ricker-Murphy, Ms. Fox said.

That price undercuts the developer, which had sold just 43 units in the tower by the end of the third quarter, according to a report from Chicago-based consulting firm Appraisal Research Counselors. Another 67 units were under contract at the end of the quarter, the report said. Asking prices for the developer's units at the tower range from $465,560 to nearly $11.5 million.

Ricker-Murphy co-principal John Murphy declined to comment through a spokesman.

Because Ms. Fox's client would assign the purchase contracts rather than sell real estate, the investor would not have to pay transfer taxes and other closing costs. That discount allows her client to sell at a modest gain, Ms. Fox said.

“The seller is not planning to lose money, but they're motivated to sell at a reasonable price and not make a killing,” she said.

Ms. Fox declined to disclose the makeup of the portfolio but said the units are “smaller rather than larger,” with a mix of west and east-looking views. A potential buyer could rent out the units at projected monthly rents between $2,500 and $3,200, she said.

Ms. Fox said her client aims to sell its contracts before the end of the year.

“From the time this building started marketing until now, we've certainly seen a lot of shifts in the marketplace,” Ms. Fox said. “The time is right for my client to let go.”