Looking for a Chicago Team!
Rental Property Investor · Chicago, IL · Member since 2020 · 11 posts · 5 votes
Looking to revitalize the poor neighborhoods in Chicago without pushing out old tenants. I’m brand new to real estate investing but extremely determined to make an impact in my community.
With Covid-19, we’re soon to be looking at a market that was similar to what occurred in 2008. I think this will be a prime time to purchase properties (both commercial and residential) at a lower cost.
Let me know your thoughts and any suggestions you may have to help me make this happen!
@Eric M. With the unemployment rate being so high, a lot of people are deferring their mortgage payments. Some without knowing that when their deferment period has ended, they will now owe multiple months upfront. I predict that the 4th quarter of this year is when we’ll see the foreclosure rate increase-which will be a great time for investors to buy in.
As far as numbers go, I want to use crowdfunding for this project, which is one of the reasons why I’m on this app. I want to purchase vacant commercial properties to supply more jobs eventually. I want to create a program for non violent offenders that were recently incarcerated so they can use their trades/skills to physically help rebuild their neighborhoods. In doing that, the people that have moved out of the neighborhoods they grew up in would be able to move back due to the growth and appreciation of the neighborhood. We would be able to modestly raise rents if needed without having to push people out.
This is an idea that I believe could be executed if done correctly. We need to rewrite the definition of gentrification.
Well, I think you are going to find that the mortgage lenders will be prevented or deincentivized from foreclosing as you expect. First of all, Trump wants to get re-elected to stay out of jail. The economy rebounding is his only hope of that.
He does not care how much money he has to borrow or print....he will do anything possible to keep the economy appear to be afloat. He will give money to lenders to not foreclose...he will threaten them if they do begin mass foreclosures....he will sue them if they begin mass foreclosure. I can't imagine there is anything he will not do to prevent things from happening which would make him look bad before the election in Q4. And even without the obstacle of Trump, the FC process is much slower than you think and has been slowed more and backlogged by the courts being closed. I am a FC purchaser at auction and also went through 2008 and I have some insight on how the system works.
If a borrower started missing payments in March 2020, that home does not go to FC auction in Q4 2020. I would be surprised if any FC action would even be initiated by Q4. It wouldn't generally even be initiated be until at least Q2 2021 and very probably later....sometimes much later. The last 2 properties I bought at FC auction were in early Feb 2020. One had FC initiated in Feb 2017 (loan unpaid beginning Jan 2016) and the other in June 2017 (loan unpaid back to June 2016). So that is 3-4 years from missing the first payment until actual auction. That is a 2023 auction date for buildings thrown into FC by COVID. It takes a very long time to go through FC and again, the courts have been closed so things will be slower and pressure will be on banks to not foreclose, but give modification and forebearance. I think you will be waiting a long long while if you are waiting to purchase these buildings in FC.
When I asked how do you make the numbers work, you answered crowdfunding...but I was not asking where you plan to get financing. I was literally asking how do your numbers add up to make a profit?
What might be an example of a deal where you would buy the building, borrow money/pay investors, invest in rehab, and then keep the rents the same.....and have it be a profitable investment? Actual numbers. I don't see how that equation adds up. You can try to redefine gentrification all you want, but you can't change the numbers unless you are getting free grant money from someplace or don't intend to make profit. Maybe that is your plan, who knows?
Think about it. Your stated plan is to buy a building that is in foreclosure....and therefore undervalued.... great. I do the same. But if the landlord is not paying the mortgage, then that building is likely not collecting anywhere close to full rent. Either the units are vacant or the tenants are not paying, or some combination. So once you buy the building, why do you want to keep the same tenants? How does that lead to success for you to keep non paying tenants? I get the desire to want to keep them and there are times when you are required to keep them, but how do you get them to pay when they weren't paying the previous owner?
And let's say you do want to keep them and they can magically pay their rent now. Exactly how do you even keep those actual same tenants while "revitalizing" the property? Do you move them out and then back in? That's very expensive. Do you rehab around them? How does that work? How do you revitalize while keeping the same tenants? It doesn't make sense to me. I get that you WANT to. I just don't get how you can.
And it certainly doesn't have to make sense to me. You are under no obligation to have a plan that makes sense to me. Feel free to ignore my questions if you don't like them. Again, I am just trying to maybe bring up some legitimate questions and maybe get you to consider that there may be issues you are overlooking.
Sounds like a great mission! What neighborhoods are you looking into?
Hi @Aja Devaney,
That's a great idea and would love to help! The market is still stable in Chicago, and if there is a negative impact to real estate, we may not see until the coming months. But, its always good to prepare a game plan prior to be prepared. Are you thinking south-side neighborhoods in Chicago?
@Samuel Pavlovcik I was interested in Maywood or Pilsen. There’s a new development called The 78th that’s right in the South Loop and Chinatown so all the surrounding neighborhoods will appreciate and Pilsen will be one of them.
I have family in Maywood and it’s in a great location. Right in between the city and the west suburbs. I’ve read a lot of articles how that’ll grow in future too.
@Eudith Vacio that’s what I’m thinking too. I believe in the 4th quarter of this year is when we’ll see the market fluctuate. I know there’s a new development near the South Loop called The 78 that’ll be completed by next year and I was thinking the Pilsen neighborhood could appreciate because of that. I was also looking at Maywood, near the west side. Are you in the Chicagoland area?
@Eudith Vacio that’s what I’m thinking too. I believe in the 4th quarter of this year is when we’ll see the market fluctuate. I know there’s a new development near the South Loop called The 78 that’ll be completed by next year and I was thinking the Pilsen neighborhood could appreciate because of that. I was also looking at Maywood, near the west side. Are you in the Chicagoland area?
Aja and Eudith
Lets connect for we have similar ambition
@Tom Kaz Stay away as far as purchasing?
@Tom Kaz I’m not sure. I know North Maywood is where the developments are starting but I’m sure the entire city will eventually be revived.
Hi @Aja Devaney,
I actually lived in Pilsen for a year, love the neighborhood and this idea!
We have similar ambitions for the long run, would be great to connect to talk more about the plans you have!
Hi @Aja Devaney, sounds like you have a great mission!
I have an building next door in Bellwood, I’ve been interested in Maywood for the prices but I know the neighborhoods may not be the best but you have a huge advantage since you live there and know the area!
I would just be analyzing deals in the areas you are confident in in Maywood and start reaching out to lenders to see what you can qualify for since they are getting stricter. That way you can start making offers right away if you haven’t started already
Looking to revitalize the poor neighborhoods in Chicago without pushing out old tenants. I’m brand new to real estate investing but extremely determined to make an impact in my community.
With Covid-19, we’re soon to be looking at a market that was similar to what occurred in 2008. I think this will be a prime time to purchase properties (both commercial and residential) at a lower cost.
Let me know your thoughts and any suggestions you may have to help me make this happen!
I don't want to be a wet blanket. Your mission sounds wonderful in theory, but reality does inevitably set in.
I highly doubt you are going to get anything close to 2008 type price decreases ...Covid may or may not be a buying opportunity. It certainly is not clear, but that is not my point.
I am just curious about your main statement to "revitalize without pushing out old tenants". Wonderful thought. But I am curious how you think that works, numbers wise. This is the problem. You can't invest in revitalization without raising rents. You can't raise rents and keep the old tenants. This is the conundrum of gentrification. I have never seen it work where an area (or even a single building) is actually revitalized while keeping the same residents.
How do you plan to make the numbers work?
@Alex Morales Sounds good Alex. Let’s connect and make this happen!
@Chris Herrera Thank you Chris! I want to get started right away, so I appreciate your advice. I’ll be sure to reach out to you if I have any questions.
@Eric M. With the unemployment rate being so high, a lot of people are deferring their mortgage payments. Some without knowing that when their deferment period has ended, they will now owe multiple months upfront. I predict that the 4th quarter of this year is when we’ll see the foreclosure rate increase-which will be a great time for investors to buy in.
As far as numbers go, I want to use crowdfunding for this project, which is one of the reasons why I’m on this app. I want to purchase vacant commercial properties to supply more jobs eventually. I want to create a program for non violent offenders that were recently incarcerated so they can use their trades/skills to physically help rebuild their neighborhoods. In doing that, the people that have moved out of the neighborhoods they grew up in would be able to move back due to the growth and appreciation of the neighborhood. We would be able to modestly raise rents if needed without having to push people out.
This is an idea that I believe could be executed if done correctly. We need to rewrite the definition of gentrification.
Looking to revitalize the poor neighborhoods in Chicago without pushing out old tenants. I’m brand new to real estate investing but extremely determined to make an impact in my community.
With Covid-19, we’re soon to be looking at a market that was similar to what occurred in 2008. I think this will be a prime time to purchase properties (both commercial and residential) at a lower cost.
Let me know your thoughts and any suggestions you may have to help me make this happen!
So here are my thoughts:
I know I sound like a wet blanket. But you said you're a newbie and I can sense the excitement in your post but there's a lot to consider beyond enthusiasm to accomplish what you want to do.
With that said I'm going to give you a ray of hope- A few years ago, I believe after Hurrican Katrina, there was a small town that became a food desert. The local grocery got blown away and the company decided not to rebuild. The people in this small town were forced to drive miles just to go shopping. Some innovative people in the town got together and decided to use crowdfunding to build their own grocery store. Everyone rich & poor got involved. It worked. Now I'm simplifying the story. The other reason it worked was because of private/corporate & government partnerships.
Good lunch on your endeavors.
@Crystal Smith I appreciate your input. I’m transparent with my ignorance. I’m on here to learn and connect. Look up the Tulsa Real Estate Fund and Buy Back The Block with Chris Senegal to expand your knowledge as well.
@Crystal Smith I appreciate your input. I’m transparent with my ignorance. I’m on here to learn and connect. Look up the Tulsa Real Estate Fund and Buy Back The Block with Chris Senegal to expand your knowledge as well.
Referring me to the Tulsa Real Estate Fund doesn't "expand my knowledge." In my reply to your post I said
Crowdfunding- Do you know and understand rule 506(B) and the difference between an accredited and unaccredited investor & how it applies to Real Estate? If you're going to execute your plan get an education on Crowdfunding & what you can & cannot do relative to Real Estate
The first thing the managers of the Tulsa Real Estate Plan did was recruit accredited investors and hire an SEC lawyer. That's how they started their team. Then they went to the masses. If you want to duplicate what they are doing then start studying.
Thank you @Crystal Smith
@Eric M. With the unemployment rate being so high, a lot of people are deferring their mortgage payments. Some without knowing that when their deferment period has ended, they will now owe multiple months upfront. I predict that the 4th quarter of this year is when we’ll see the foreclosure rate increase-which will be a great time for investors to buy in.
As far as numbers go, I want to use crowdfunding for this project, which is one of the reasons why I’m on this app. I want to purchase vacant commercial properties to supply more jobs eventually. I want to create a program for non violent offenders that were recently incarcerated so they can use their trades/skills to physically help rebuild their neighborhoods. In doing that, the people that have moved out of the neighborhoods they grew up in would be able to move back due to the growth and appreciation of the neighborhood. We would be able to modestly raise rents if needed without having to push people out.
This is an idea that I believe could be executed if done correctly. We need to rewrite the definition of gentrification.
Well, I think you are going to find that the mortgage lenders will be prevented or deincentivized from foreclosing as you expect. First of all, Trump wants to get re-elected to stay out of jail. The economy rebounding is his only hope of that.
He does not care how much money he has to borrow or print....he will do anything possible to keep the economy appear to be afloat. He will give money to lenders to not foreclose...he will threaten them if they do begin mass foreclosures....he will sue them if they begin mass foreclosure. I can't imagine there is anything he will not do to prevent things from happening which would make him look bad before the election in Q4. And even without the obstacle of Trump, the FC process is much slower than you think and has been slowed more and backlogged by the courts being closed. I am a FC purchaser at auction and also went through 2008 and I have some insight on how the system works.
If a borrower started missing payments in March 2020, that home does not go to FC auction in Q4 2020. I would be surprised if any FC action would even be initiated by Q4. It wouldn't generally even be initiated be until at least Q2 2021 and very probably later....sometimes much later. The last 2 properties I bought at FC auction were in early Feb 2020. One had FC initiated in Feb 2017 (loan unpaid beginning Jan 2016) and the other in June 2017 (loan unpaid back to June 2016). So that is 3-4 years from missing the first payment until actual auction. That is a 2023 auction date for buildings thrown into FC by COVID. It takes a very long time to go through FC and again, the courts have been closed so things will be slower and pressure will be on banks to not foreclose, but give modification and forebearance. I think you will be waiting a long long while if you are waiting to purchase these buildings in FC.
When I asked how do you make the numbers work, you answered crowdfunding...but I was not asking where you plan to get financing. I was literally asking how do your numbers add up to make a profit?
What might be an example of a deal where you would buy the building, borrow money/pay investors, invest in rehab, and then keep the rents the same.....and have it be a profitable investment? Actual numbers. I don't see how that equation adds up. You can try to redefine gentrification all you want, but you can't change the numbers unless you are getting free grant money from someplace or don't intend to make profit. Maybe that is your plan, who knows?
Think about it. Your stated plan is to buy a building that is in foreclosure....and therefore undervalued.... great. I do the same. But if the landlord is not paying the mortgage, then that building is likely not collecting anywhere close to full rent. Either the units are vacant or the tenants are not paying, or some combination. So once you buy the building, why do you want to keep the same tenants? How does that lead to success for you to keep non paying tenants? I get the desire to want to keep them and there are times when you are required to keep them, but how do you get them to pay when they weren't paying the previous owner?
And let's say you do want to keep them and they can magically pay their rent now. Exactly how do you even keep those actual same tenants while "revitalizing" the property? Do you move them out and then back in? That's very expensive. Do you rehab around them? How does that work? How do you revitalize while keeping the same tenants? It doesn't make sense to me. I get that you WANT to. I just don't get how you can.
And it certainly doesn't have to make sense to me. You are under no obligation to have a plan that makes sense to me. Feel free to ignore my questions if you don't like them. Again, I am just trying to maybe bring up some legitimate questions and maybe get you to consider that there may be issues you are overlooking.
@Eric M. Thank you for your questions. With me being new to this, I can’t give you the answers that you’re looking for. They will however push me in the right direction so I can figure out ways around the obstacles that you presented.
@Aja Devaney I’m also a newbie investor looking to buy rental properties but on the south side. I’d love to connect to follow your journey and we both learn along the way.