All Forum Posts by: Bob Floss II

In Illinois, I can typically file an emergency motion to delay the sale but I need around 4 days to safely get it done. However, it can be tough to get the court order if the homeowner has already filed bankruptcy.

@Seth Coronis If you are looking to invest that much cash, you should be looking at multi family opportunities. If you want to stick with condos to minimize responsibilities, there are strategies you can look at to get bigger returns. I have clients that target buildings with issues that prevent buyers from getting financing and are only available to cash buyers. You can get nice units at a discount and higher rental returns. The problem is this limits your exit strategy and you may be forced into a long game of trying to buy up the building and deconvert to an apartment building. 

@Ronald Daley I don’t run into this as an issue. The issue is trying to purchase a 3 unit in Chicago and zoning will only approve it as a legal 2 unit. 

Offering opportunity to buy into a new construction townhouse development in Evanston. Preliminary work has been done with EPA testing and plans for development. Seeking funds to take project into next phase. Can make a silent investment with 12 month cash out, or make longer term investment and take equity stake in project. Seeking funds of $550,000. 

Please message me directly for more information.

Looking for partner on a small townhouse rehab in Chicago. All the details have been lined up and contractor is ready to start. 

Purchasing property for $40,000 and property needs roughly $40,000 for gut rehab to be completed in about 8 weeks. Comparable units in the same complex have recently sold for $99,000, $116,500, and another pending at $129,900. 

Please contact me directly for more details or discuss terms. We are looking for a private investor that will be secured on the property or an investor that wants an equity portion.

https://www.chicagobusiness.com/commercial-real-es...

A court-appointed receiver is taking another big step in his push to sell off a portfolio of local apartment buildings tied to an alleged Ponzi scheme.

A broker has already lined up buyers that have agreed to pay a combined $7.7 million for six South Side multifamily properties owned by affiliates of EquityBuild, a Florida-based real estate firm accused last year by the Securities & Exchange Commission of running the Ponzi scheme, court documents show.

Now, the receiver, Kevin Duff, is asking a judge for permission to put a dozen more EquityBuild properties—11 on the South Side and one in west suburban Maywood—up for sale. Comprising 415 units, the properties offer a big opportunity for investors aiming to bulk up on South Side apartments, probably for less than the $22.4 million EquityBuild paid for them over the past several years.

Duff is selling off EquityBuild’s properties to recover as much money as possible for investors that the SEC says were bilked in the alleged Ponzi scheme. EquityBuild and its leaders, Jerome Cohen and son Shaun Cohen, raised at least $135 million from more than 900 investors starting in 2010, according to a civil fraud lawsuit filed by the SEC last August. With the money, the Cohens amassed a portfolio of 79 apartment buildings and 34 single-family homes, totaling 1,674 units, according to a court document.

But the Chicago investments suffered big losses, and EquityBuild’s fundraising program turned into a Ponzi scheme, the SEC alleges, with money from new investors used to pay off earlier ones. The Cohens have not admitted or denied the allegations, but they agreed to stop fundraising or obstruct the SEC’s push to recover their investors’ money.

In November, a judge approved a plan to sell the first batch of EquityBuild properties, South Side buildings totaling 206 apartments. The outcome shows that EquityBuild, in its enthusiasm for Chicago apartments, overpaid for the buildings, and by a wide margin: Four buyers have agreed to pay a combined $7.7 million for properties, about 33 percent less than the $11.5 million EquityBuild paid for them over the past few years, according to a court document.

Yet the combined price is slightly higher than the $7.4 million that the properties were listed for. More apartment investors have been pursuing South Side buildings in recent years as returns on apartments in other places have shrunk.

“We had interest from all over—numerous groups from New York and California,” said Finley Askin, associate director at SVN Chicago Commercial, the brokerage hired to sell the buildings.

An affiliate of Chicago-based Pangea Real Estate agreed to buy two properties, including a 44-unit building at 8100 S. Essex Ave, while another Chicago apartment investor, WPD Management, agreed to buy two others, a court document shows. A WPD executive declined to comment and a Pangea executive did not return a phone call or email.

Duff, the receiver, filed a motion last month asking a judge to approve the sales. Duff also filed another motion seeking approval to move forward with the next batch of sales. The portfolio includes a 68-unit building at 4520-26 S. Drexel Blvd. that an EquityBuild venture bought for $5.7 million in January 2017, and four buildings with 56 units between 8326 and 8358 S. Ellis Ave. acquired for $2.4 million in February 2017, according to the motion.

Askin said he wouldn’t discuss the sale plan for the second group of properties until Magistrate Judge Young Kim signed off on it. Based on the results of the first sale and the urgency to unload the buildings, it’s likely that EquityBuild investors could face losses on the second wave of sales as well.

But it’s still way too early to estimate how much money the receiver will collect in its effort to pay back EquityBuild’s investors, said Duff’s attorney, Michael Rachlis, of Chicago-based Rachlis Duff Peel & Kaplan.

“We obviously hope to maximize the recovery for every affected victim,” he said. “That’s the goal.”

@David Burton Above is correct, a wholesale contract falls under the definition of an option as we are taught in law school. It doesn’t sound like a big deal but it fundamentally changes the contract. 

@Howard C You need to get around some experienced investors, attorney, mentors STAT. Based on the questions you are asking, you are in over your head and need help. 

If the house is worth $1.2 million, why would the bank give it to you for $700k?? They will do a BPO (broker price opinion) and determine their asking price. 

Recording a deed has ZERO effect on the mortgage, liens, and foreclosure process.

Why would you pay $100k to someone in foreclosure? If the mortgage was $700k and the house was worth $1.2 million then sure, but not when it’s a short sale. 

If you want to pursue the deal, get a team together to start negotiating the short sale. You have to get the bank BPO and find out if there is any money to be made. 

@Cameron Riley You need a separate account to hold security deposits. It’s amazing to me how many landlords don’t take the time to set this up. In Chicago, we have an ordinance called the RLTO and failure to comply with putting it an account, giving the tenant interest, and giving them notice of what bank, including address, is holding the security deposit can be extremely painful for the landlord. 

I tell all my clients to stop taking security deposits. Take an application and move in fee and call it a day. Holding a security deposit sounds nice, but the way tenant laws are written now it exposes you to far too much liability.

@Jamie Goldenberg I work with a handful of wholesalers and can get you set up.