Should You Buy at BLMH?

It's sometimes useful to do the numbers. From a strictly financial perspective, which is to say, looking at the costs to rent versus the costs to buy, which is the more prudent decision?

How much would it cost to rent a 2 bedroom 1 bath, or better in 60189? Let's assume we were looking for something a bit nice. What would that cost?

Rentals in 60189 vary, but we could expect to pay in a range of $1,125 a month for 995 square foot and upwards. Currently there are rentals of $1,395 per month near the high end of the monthly rents.

So to make a comparison of rent versus buy, I'll use $1,200 a month as rent.

What would be our "out of pocket" costs if we were to purchase a condo at BLMH? I'll use the 2011 monthly fees and 2010 real estate taxes that I pay for my unit, which is a "B" unit as an example. However, it's important to realize that my condo is about 1,300 square feet, 3 bedrooms and 2 baths. So my fees could be higher than what you might experience.

Assumptions: 
Monthly rent $1,200.
Purchase at BLMH for $140,000 with 5% down and 4.89% 30 year fixed rate mortgage.
Include BLMH monthly fees and real estate taxes in comparison.
Other assumptions: Owner keeps the condo for 10 years, rent or property values increase by 3% a year over that 10 year period.

What's the result?
The cost to own is $15 per month more than renting.
However, at the end of 10 years, the owner would have $33,834 recoverable equity, after paying a broker a 5% selling commission.

Not bad! Think of it this way. If you purchase at current prices, and stay here for ten years, it's possible you will have saved the equivalent of $267 per month by owning, as opposed to renting. And that's after paying real estate taxes and monthly fees!

On the other hand, continue to rent, and pay your landlord. It's your choice!

Comments, Corrections, Omissions, References

Note 1.  There are units for sale at BLMH for less than $140,000. At that price, it's a bargain, and the numbers confirm it.
Note 2. According to Zillow, the unit above would rent for $1,425. I don't know if I could rent my unit for that, but it's an indicator of what I might expect to pay to live at BLMH.
Note 3.  According to Zillow (April 1, 2011) the mid point for Wheaton home prices are $259,900. That is, half of the houses in Wheaton are priced above, and half are priced below.

Is This Sign Difficult to Understand?

At a recent association meeting, a board member stated that "some residents were confused by the entrance signs."

It's unclear who these unnamed persons are, but it was suggested that because of the confusion, the board should consider changing the signs. There was no specific recommendation made of how to help the confused resident(s). The board did not discuss this further in the presence of owners.

This post includes a photo of one of two signs which are at each entrance. I assume this is the sign that is the source of the problem. I have posted a revised sign which would be more consistent with the association's current approach to rules and regulations.

To explain the problem, each entrance has two large signs. The first is shown on this post, The second sign is a standard, bright blue on white,  "WARNING" sign stating that vehicles will be towed, who will do the towing and how to retrieve your vehicle if it has been towed. I didn't reproduce that sign here.

These signs, combined, make it clear that there is "no public parking" at BLMH, and what the consequences of violation will be. (Note 1).

Perhaps the problem, as with many rules here at BLMH, is really about "why do we need these inconvenient rules?" Of course, these rules are part of the social structure that makes this a community. So is the problem really about a few inconvenienced owners who complain to the board? Is it also about board members who are committed to satisfying these owners? (Note 3).

The signs we see on entering our community and which I photographed and posted here, clearly state "Parking Subject to the Regulations of Briarcliffe Lakes Manor Homes." Those regulations prohibit boats, campers, trucks of certain sizes and commercial vehicles. They also prohibit garage and estate sales.  (Note 2).

However, is that so difficult to understand? To be honest, the rules do at times inconvenience me, and I suppose they do others. For example, I have an old sail boat and I'd love to store it in one of the parking lots. So what if it takes up two parking spaces and inconveniences a few neighbors? If I parked it here, that would work for me, and that, it sometimes seems, is what ultimately counts at BLMH.  As an owner once shouted at an association meeting "What do we get for our money?" I guess his point was that we should each take as much as we possibly can. So, why not push the rules to the limits?


Perhaps, what is being suggested would be a change in signage to something like this:

If rules don't work for a few, then why should the board enforce them? Why not disregard them instead of inconveniencing an owner or two? If no one complains, everyone is happy, is the logic.

If too many owners complain, then perhaps the board will enforce a rule. It's to be a tug of war between opposing positions. The problem for the board might be "how to keep everyone happy?" The answer is, "we can't." Nor are we supposed to. I see nothing in our charter, bylaws, rules & regulations, or the Illinois Condominium Act, which state that it is the duty and responsibility of board members to keep the owners happy. Common sense and experience also tell me that it is not possible for people "to be completely satisfied." So why would we or board members even attempt this?(Note 3).

I can only wonder what the next step will be? Will it be to remove these signs?  (Note 4).

Perhaps someone can enlighten me?

Here's a photo of one of our "confusing" signs:
This is the sign currently posted at our entrances. It is un-retouched. 

Comments, Corrections, Omissions, References, Miscellaneous News

Note 1.  The sign above is one of those hints that BLMH is an unusual community. It's a PUD. Click on this link, to go to a post for more information: 

 Benefits of Owning a PUD - October 12, 2010

Note 2. A former board member related a story to me about an estate sale that was held on the property a few years ago, in violation of the rules. There were complaints, and it was reported that there were cars parked on lawns, blocking owner's driveways and garages, etc. But, the argument is and has been "it couldn't happen here." It might be useful to quote George Santayana: "Those who cannot remember the past are condemned to repeat it."

Note 3. In the area of rules, I too am somewhat confused. Why is it that one or more board members are willing to take up the complaints or viewpoint of those who are opposed to enforcement of rules, or break them? Yet, these same board members, ignore owners who state that they want the rules enforced? At the annual meeting, one owner stood up and said she didn't want to "live in a ghetto." She admitted that was an exaggeration, but her point was that rules need to be enforced, including the trashing of sofas, mattresses, and other discards while tenants move out, or in advance of garbage pickup day. 

I find it confusing that people complain to the board about the difficulties they have in selling their units in this terrible real estate market, and then the board looks the other way for other inconvenienced residents. 

This somewhat capricious approach to rules enforcement was culminated by the posting of a political endorsement of a board candidate by the R&R Director, in violation of the rules. That led me to conclude that rules enforcement is going to continue to be arbitrary and inconsistent here at BLMH, to the detriment of owners. It seems that rules are only to be kept if they are convenient. I inconvenient, they are to be ignored. 

Perhaps with more pressure from residents, the board will shift to a more consistent and pro-active stance. However, I now see a bench in the common areas, which I understand was placed by an owner. I'm sure another 335 unit owners probably have things they would like to place on the lawns, or modifications to the exterior of the buildings. How about a portable gazebo or two, a shady rest, a portable garage, custom painted doors, decorations all over the exterior, special awnings to keep the sun out, etc. These would each benefit various owners, so why shouldn't we be allowed to do whatever it is that benefits each of us?  Why not any and all modifications to the limited common areas? I'm somewhat tired of the color of my lobby, the color of the door, my drab garage door, etc. How about something lively and less "retro?"

Note 4. Continuing this line of thought, if paying the association fees are also an inconvenience, then why should we? These are difficult economic times. Perhaps anyone with frozen wages should get a freeze on the fees. Someone working reduced hours should get a reduction in fees. Those unemployed should get a suspension of fees until they are again employed. Finally, if you are unemployed and your "unemployment compensation" runs out, perhaps the association should start paying you to live here. Let those of us who can afford it, pay the fees. The rest of us won't. Of course, we all expect to get a new roof, a new driveway and we expect the association to respond to any complaints and write a work-order for each and every repair. However, I suppose if this situation were to occur, that someone else, like me or you, should pay the bills. Is that a reasonable definition of community at BLMH? I realize that such a thing would be an extreme example of a well-meaning but misguided owner or board member.  I work with clients in industries in which the unemployment reached an "official" 18.2%. I understand the extreme difficulties which some are facing today. However, I also understand that for an association to operate, it must have funding. Funding to pay for maintenance, our newsletter, and all manner of services and replacement projects, such as our roofs. These times will pass. We had a nasty recession (two actually) in the 1980s. We will again experience growth, more normal employment and better times. BLMH needs to continue to prepare for the future and take care of business. That business includes doing sufficient things to maintain the property. 

After watching the rules enforcement for the past two years, I must say that I am glad that in general, fee collection isn't in the hands of the board. In some respects it is; the board is involved with owners who are delinquent or tardy. The board has the power to set fees and could, I suppose, waive collection. It's important to remember that the board makes all decisions at BLMH. Our managers, maintenance company, cleaning and landscapers are all "employees" who follow the direction of the board in all things, and are hired and fired by the board. 

Benefit of Owning a PUD

This post was edited on October 25, with the addition of the photo of our entrance sign.

On October 12, Anonymous asked this reasonable question as part of a comment. I was planning on publishing this tonight at 12:01 AM, but on reading the banter, I decided to post it now:

"What I'm asking is, what is/was the benefit of us owning our own water pipes, roads, etc?"


Here's my response. We live in a PUD, which is a "Private Urban Development." That means, we own the buildings, the streets and even the water lines below them.

The principal benefit, for the developer and for the residents, is the ability of a PUD to deviate, in certain acceptable ways, from other zoning norms for the city. That means our buildings can have a different setback from the street and different separations, and instead of large grassy front lawns and sidewalks, the buildings can be arranged in an unusual way to allow that land to be put to use behind the buildings for walking paths, streams, waterfalls and extensive landscaping.

The trade-off for this is, we are responsible for some aspects of our property, including the streets, that other parts of the city are not.

You may have noticed that our streets don't adhere to the general arrangement of other streets in the neighborhood. Even our street signs are different! Our streets are a slightly different width, we have a fire lane on one side of the streets, designated as "no parking". We have a sign at the entrances designating the property as "no trespassing" with a general statement about parking and an "Unauthorized vehicles will be towed" sign. 

Parking on our streets is, unlike the city streets, reserved strictly for OUR residents, their guests and deliveries or maintenance. The streets are private. There are rules about the general types of vehicles that are allowed.

We are, for all intents and purposes, a gated community without the gates. 

To paraphrase several municipalities description of a PUD, a Planned Unit Development has the benefit of producing a well-designed development that will have a positive effect on health, security and general welfare. This benefit is achieved by establishing a unitary control over an entire development area, rather than control on a lot-by-lot basis. A typical PUD development plan includes the following information: land uses, distances between buildings, allocations for open space, on-site parking, density limitations per acre, periphery setbacks, floor area ratio, land coverage, land use relationships with adjoining areas, and any other applicable specifications as deemed necessary by city planning staff.

Some of the advantages pass to the city. They provide services for which the responsibilities of the city ends at our entrances and property lines. That includes water and snow removal. Of course, the city provides residents with fire and police protection.

If a perspective buyer is interested in a very quiet community, with great foliage and private walking paths, etc. this place can't be beat. Here is a post I made earlier this year and I think it sums up some of the pros and cons:

Link to "Our City Within A City"

Special Entrance Signs
There are two signs at each entrance. They pertain to the rules and the regulations, and to how to retrieve your vehicle if it is towed. The signs are very explicit. They make it clear, you are entering private property, which is exactly what our PUD is. Here is one of the signs, and I added this photo on October 25, 2010:

Comments, Corrections, Omissions, References, Miscellaneous News

Note 1.  I do agree that it is sometimes shocking when owners don't understand some of the basics of living at BLMH. Anon. above may be fully aware, but some of our owners are not, based on simple conversations including the recent water line break. Here are the responses of several owners on Sunday:

1. Don't worry about it, it's a city problem.
2. Don’t worry about it, it's a city problem. (Yep, two different owners).
3. We should sue somebody.
4. Won’t the company that just did the driveway replace it under warranty?
5. Why didn't I get a notice before the water was shut off; that's common courtesy!
6. Ouch! We own that pipeline!

The realtor who is selling a property should explain the realities of a PUD to a perspective buyer. Perspective owners should, for their part, do more research. Unfortunately, people don't always do their homework. They don't research the property, they don't check the rules and regulations, etc. before purchasing. Then, after purchasing they become dissatisfied because they discover these things. Some come to the conclusion they were "duped" or become a disgruntled owner, who does their best to make the board and other owners miserable. Some may, after purchasing and getting their first "rules violation" notice, discover that we even have rules!


Recent boards have apparently decided that the way to deal with this is appeasement of disgruntled owners, so many of our rules are no longer enforced, or are enforced haphazardly and inconsistently. Taking such an approach removes some of the advantages we have. For example, attempts by well meaning but misguided board members to open up the community to outside groups and events. We then are in a situation where our "gated community" is no longer gated, We then also have the disadvantage of paying for something, a benefit, we no longer have! 


Those streets are our property and we pay for their maintenance. Larger vehicles do exert much more wear and tear on them. No kidding. Check the condition of some sections of  north Lakecliffe. 


This approach will, I expect, result in some much larger problems in the future.


I have strongly recommended our association consider a sales brochure with this basic information, and much more. However, there is currently little interest. So for now, it seems this association would rather take the risk of acquiring owners who are uninformed at the time of purchase, and would also rather "clean up the mess" and deal with these unhappy people. 


We could also have a much more expanded "Welcome Packet." However, that's a little too late inform a buyer of some of the basics. Hmmm, should we publish a 900 page "owners manual" to go with the 1800 page "Board Member's Manual" which includes all the procedures a board member should follow when there is a water main break?