New Construction in Chicago

[Veronica Joyner]

Hi,

I’m considered a small investor. I own a couple of units free and clear, a small commercial building, and I have a lot of equity in my home.

I’d love to switch gears and trying new construction. I see some reasonably priced lots in up in coming areas and first thought, a multi unit would fit perfectly in that spot/neighborhood.

I briefly spoke with my loan guy, but moving forward seems overwhelming given my lack of experience. The closest experience I have is a gut I did to one of my units. The outcome was amazing. The lucky tenant was willing to pay $200 more than asking and signed a 2 year lease.

Any advice, suggestions for moving forward?

Thanks

[Sanat Bhandari]

@Veronica Joyner Generally speaking, ground-up construction (GUC) is a very high-risk venture with a lot of variables not in your control and if a developer were to default mid-way, lenders are left holding the bag with incomplete construction and no way to monetize it other than selling it for pennies on the dollar. Especially with the rising rates of today and uncertainty in labor market, financing construction has become more challenging than ever. 

I recommend partnering up with someone who has built multifamily properties before since they could bring 'experience and resume' while you're bringing capital to the table. Once you have a project under your belt, you should be able to qualify by yourself for your next GUC project. 

Commercial deals are all about partnering up with parties that have the pieces of the puzzle that you're missing