203k Purchase and Gut Rehab of 4-Unit Building in Chicago

[Gabriel Alvarado]

Hi,

I am currently in discussion with my neighbor to purchase a 4-unit building in Chicago (Logan Square). The current layout of the building is 2 floors, with 2 units on each floor, and there is an unfinished basement (supposedly about 7 ft. tall). While I have not yet seen the inside of the building, he did throw out a number. However, the building is in need of a full gut rehab, as the building has not really been updated (has furnace from 1956, will need updated plumbing and electricity). My plan is to merge the 2 existing units, so that I have 2 bigger units measuring about 1,500 sq. ft. each. Additionally, I plan to have 2 new basements units (about 600 sq. ft. each). The building will need to have new roof, tuckpointing and the balcony will need to be possibly replaced. I understand that this is an ambitious plan, but what would the rehab cost me, roughly? I am trying to have some type of estimate so that I can assess whether what purchase price would be fair. I appreciate everyone's help in advance.

Thanks,

Gabriel

[Jonathan Klemm]

Hey @Gabriel Alvarado - That's a tough question without some of the finer details but it sounds like you have about 3000 SF in total all of which will need to be rehabbed.  Also, it may make more sense from a cash flow perspective to keep it as a 4 unit instead of switching to 2.  Are you sure that those 2 basement units could be legalized?

Will you plan to add any bathrooms or other plumbing fixtures (i.e, laundry?)  I ask because if so you will likely need to upgrade the water service which can be a huge cost.

I live in Logan Square the same Chicago neighborhood as you...happy to hop offline of the forums and discuss your next steps.

Regardless, buying a 4 unit building in Logan Square will be a great deal 5 years from now!