Multi Unit Maneuvers

Posted at 12:46 PM, May. 10, 2009

I recently started working with a buyer who is in the market for a multi-unit building in the West Ridge (aka West Rogers Park) area.  This particular sector has proven to be quite the challenge. 

I have already been shopping for a large entity since January and have seen over 100 multi-family buildings on the Northwest side of Chicago including Albany Park, Irving Park, Dunning, Hermosa, Logan Square, Humboldt Park, Avondale and Mayfair so I have seen my fair share.  What has made this particular market so difficult is the amount of the buildings that are either in foreclosure or in a short sale situation.  Now, couple that with tenants (aggitated and uncooperative none-the-less) and you have a day of frustration on your hands.  I can't tell you how many times I had appointments that I could not get into the building because of the tenant problem. 

The good news (from a buyer's perspective), is that this market was the hardest hit.  There is a considerably smaller demand for multi-unit buildings so values have dropped dramatically.  However, even with the great price reductions, most that I have seen are in need of repair.  There is a lot more "house" to fix.  Lastly, when the majority of the buyers out there are using FHA loans, well, you have a formula that can pretty much spell disaster.  FHA back loans require properties to have only minimal work needed and can take longer to close making foreclosures and short sales a higher risk for buyers.   So in essence, when shopping with new buyers using FHA loans and looking at multi-family buildings, you are literally looking for that needle in a haystack.

Boy I love a good treasure hunt!