I have been working with an investor who also lives in Chicago's North Lawndale Neighborhood. This neighborhood has a lot of vacant land due to vacant 2-3 unit apartment buildings that were not maintained. High foreclosure rate in this neighborhood but it appears to be the Mecca Land for Chicago Investors.
I love this neighborhood because of the architectural beauty and detailing on the outside of these awesome buildings. What is sad is how so many are buying these buildings as investors who want to "flip" these buildings around and make a quick buck.
The negligence within the City of Chicago's Building Department let alone the Alderman for this neighborhood is oveerwhelming as some of these buildings are next to the Chicago Police Station and serious rehab work was ongoing and yet no permits!
Let me give you an example of the dreams that these investor/flippers are aspiring to accomplish:
For instance, a property that just went on the market for $192,900 and was purchased in May 2011 for $73,000 and had little work done to it. Granted it is a three unit building with three bedrooms and two bathrooms for each unit but where is the justification of such an increase in value? Where was the buyer when this property was on the market as a short sale, yet no buyers?
This past week I was in buildings that were purchased anywhere from $20K to $35K as 2 unit buildings. They were most relisted 6 months after the purchase of 1.5 years after the purchase in the area of around $179K. Now, some or not all of these units had new copper piping (where one could at least see it), electrical (decent but without permits), refinished floors, gotta love those hollow core doors that run $19.00 at Menards or $23.00 each at Home Depot for the "new look". Some of the agents were sharing with me that there were new decks that were put on since the purchase, yet when one looks at the old listing - right there is the new deck that ths short sale agent ws pushing so hard to get an offer for.
Bathrooms - I have a thing about bathrooms. Some of these hobbyist rehabber/flippers installed their own tile work which was not plum and I had to hold my tongue on some of it. Bathroom Vanities that weren't level and the one agent really took the prize when he showed how you really can make the toilet efficient if you remove the lid to the new toilet (which the arm wasn't adjusted for water flow) and then flush the toilet. It wasn't efficient and I wasn't about ready to show this rehabber/investor how to go about doing something so simple as adjusting the water flow/level in the toilet tank so it would flush properly.
If you are going to buy investment properties, I strongly encourage you know what you are looking for in a building and not just take the word of listing agents and in which, yes, one of them got mad at me when he lied and said the roof was new when in total actuality it wasn't new and it wasn't a rubber membrane roof. My buyer about walked away when this agent stated that they would put a rubber roof over an existing tar roof. Right there, my client knew that this agent/seller/flipper would do 10 out of the 100 things I found wrong with this building and wouldn't be doing them to code yet in a professional manner.
Work with an real estate agent who knows what to look for and to call it what it is because it is your investment and if the wrong decision is made, like I warn my investors, it can eat up your time and part of your profits.
And yes, I still believe in the North Lawndale area of Chicago.
