Chicago Woodlawn neighborhood purchase and rehab financing

4 Replies

Hi BP,

I work at a law firm and specializes in helping property owners to get real estate tax reductions. I have been noticing that some of our clients have been investing in the East Woodlawn neighborhood of Chicago. The neighborhood is a bit rough, but they seem to be speculating future appreciation due to the proposed Obama Library that is planned to be built nearby. For now, these investors seem to be making good returns by fixing the multifamily buildings and renting them out (many via section 8). I've been thinking of purchasing something in the area. I'm sure that I could find a 2 to 4 unit building between $80k and $100k. They'ed likely need up to 100k in renovations. ARV of similar properties averages between $260k and $320k. I only have enough cash from my HELOC to purchase such property, but not to make the repairs. I've been trying to find out more about the a delayed financing loan option in order to quickly get my cash back to make repairs, but have had no luck with the lenders I've contacted so far. Any suggestions on how I could finance a deal like this? Any general input on my action plan would also be greatly appreciated.

I spoke with two lenders yesterday that just told me that they don't do delayed financing loans.  I then went on the Freddie Mac website and found a list of multi family lenders.  The first one I heard back from told me that they only lent to bigger multi family properties (more than 6 units).  They told me I needed to find a regular residential lender for a 3 unit building.  I am waiting for responses from other lenders I have reached out to.