2nd Closing in Chicago

15 Replies | Chicago, Illinois

My group just closed, September 20th, on a 6 family value add opportunity in the Chatham area.  It was a bit touch and go right before and during the closing.  On Wednesday the seller's attorney stated that we may have to do a dry closing due to a problem on the  seller's side, of course.  This caused some issues/concerns with our group but, we argued and decided to move forward.  Thankfully, we were able to close with a few more hiccups.  We mainly like the opportunity to  add two legal additional units to the property for force greater price appreciation after renovations.  I  want to thank the group for their support.  Still battling over long term financing options but, we are exploring our options further.  

Congratulations, please keep us posted and post pictures and numbers was everything is up to date. keep up the great work.

Originally posted by @Scott Skinger :

Congrats @Calvin Lipscomb, glad to hear that things are working out.

 We still have  some ongoing issues but, we will work it out someway.  Permanent financing is an issue since we are; 1. New to real estate 2. From a different state.  We want to partner with a local bank to obtain the best financing for our buy and hold strategy.

@Calvin Lipscomb Nice work, look forward to hearing how adding two more units goes. Finding long-term financing for apt buildings is getting pretty tight. The lenders I spoke with for my 6-unit close last month were pretty much all looking for balloons rather than fully-amortizing loans.

Originally posted by @Cody Ray :

@Calvin Lipscomb Nice work, look forward to hearing how adding two more units goes. Finding long-term financing for apt buildings is getting pretty tight. The lenders I spoke with for my 6-unit close last month were pretty much all looking for balloons rather than fully-amortizing loans.

 We were not even being offered balloons.  We are still battling you are new and out of towners problem.  We are tackling a few more banks to see how we can develop a relationship.

Congratulations on moving forward.  Would you care to describe your strategy on purchasing in this area, and what kind of financing you guys went with initially? I am a newbie and putting together strategies to dip my toe in the water.  Would love to hear your experience while its still fresh.  Thanks. 

Originally posted by @Cody Ray :

@Calvin Lipscomb Nice work, look forward to hearing how adding two more units goes. Finding long-term financing for apt buildings is getting pretty tight. The lenders I spoke with for my 6-unit close last month were pretty much all looking for balloons rather than fully-amortizing loans.

At least they were offering you terms! We are in the stabilization phase right now and will not need our permanent financing for another 6-9 months from now. So we have been banging and knocking on doors getting ready for our exit strategy out of the HML to more traditional financing. We are focusing on banks for the lower financing options they can offer.

Originally posted by @Eric Congious :

Congratulations on moving forward.  Would you care to describe your strategy on purchasing in this area, and what kind of financing you guys went with initially? I am a newbie and putting together strategies to dip my toe in the water.  Would love to hear your experience while its still fresh.  Thanks. 

 We are a long term buy and hold strategy.  Long term for us is 15+ years.  There are economic and demographic shifts in the area that will see a major shift in the South Shore area in our view.  So we are targeting 6 family units and doing the overall reinvestment into the properties for our long term hold.  The truly easy money was made 4-6 years ago but, I believe that there are long term opportunities in the community.  Having multi-family units will enable us to ride out the expected down turns and provide us with cash to scope up more properties when properties value drop. 

Originally posted by @Calvin Lipscomb :

 We are a long term buy and hold strategy.  Long term for us is 15+ years.  There are economic and demographic shifts in the area that will see a major shift in the South Shore area in our view.  So we are targeting 6 family units and doing the overall reinvestment into the properties for our long term hold.  The truly easy money was made 4-6 years ago but, I believe that there are long term opportunities in the community.  Having multi-family units will enable us to ride out the expected down turns and provide us with cash to scope up more properties when properties value drop. 

I'd be curious to hear more about your thoughts on the economic and demographic shifts in South Shore. I'm still torn. People have been forecasting improvements for 3 decades now, and they've yet to really materialize. But it does feel like something is changing, at least on the northern blocks near Jackson Park Highlands.

Originally posted by @Cody Ray :
Originally posted by @Calvin Lipscomb:

 We are a long term buy and hold strategy.  Long term for us is 15+ years.  There are economic and demographic shifts in the area that will see a major shift in the South Shore area in our view.  So we are targeting 6 family units and doing the overall reinvestment into the properties for our long term hold.  The truly easy money was made 4-6 years ago but, I believe that there are long term opportunities in the community.  Having multi-family units will enable us to ride out the expected down turns and provide us with cash to scope up more properties when properties value drop. 

I'd be curious to hear more about your thoughts on the economic and demographic shifts in South Shore. I'm still torn. People have been forecasting improvements for 3 decades now, and they've yet to really materialize. But it does feel like something is changing, at least on the northern blocks near Jackson Park Highlands.

 Correct.  People have been saying a number of things of decades, more of a wish and a prayer back then.  As an out of state of investor and a non-native to Chicago I have to dig into more of the facts to make such a long term bet.  The skinny, the area will come under pressure due to University of Chicago continued growth and prominence.  That will continue to be a key anchor in the area.  The price points will get "too high" in the Hyde Park area and people will spill over to the Woodlawn area for greater value and opportunity.  Will it be tomorrow? No.  And, I am glad for that.  Giving my group an opportunity to try and cherry pick prime locations on that side.  Because once that trend becomes clearly visible it will become a self-fulling prophecy when the "big money" comes rushing in.  Next, the Obama Library will eventually be built creating a few jobs and more tourist to the area which will be another economic anchor in the community (I have discounted the Library as an outright stimulus for growth in the area.  Why?  Truly quantifying that is too iffy and speculative, in my view.  However, if it truly becomes a stimulus for the community it will only drive prices up creating extra unaccounted for value for property owners and business already in the area.).  In the next decade, I anticipate Chicago having a Republican mayor just like NY which will encourage more business investment in the area.  Those are few my thoughts around why I am investing in Chicago.