Chicago - Advice for tearing down and developing a lot

[Stefanie K.]

I currently own a pre-fire 3 flat (aka VERY OLD, 100+ years) in a very desirable neighborhood of Chicago and when we purchased it, we purchased it for the land value (tear downs all up and down our block). The house is in good shape for it's age and we did some remodeling to it a year ago and currently live in 1 unit and rent the other 2. Our goal has always been to find a "forever" multi-unit in the city but the more I am thinking about it, the more I am thinking about the possibility of demoing our current 3 flat and building a multiunit, exactly how we want it, on the land.  I don't have any experience working with an architect, financing a deal like this, pricing it out or finding the right contractor to do the work who is also familiar with Chicago building codes, expediting permits, etc.   This wouldn't be something we do for 5-10 years but want to start exploring if this is realistic and the right plan.  

Has anyone gone down this road, specifically in the city of Chicago, who could point me in a direction to start getting some information about what it would really take do to this?    

[Prashanth Mahakali]

Hello Everyone,

In Chicago demolition process starts with application for a wrecking permit. You can’t get a building permit for a new construction without applying for a wrecking permit(unless it’s a vacant lot) or having one already. You can pre-determine if the lot zoning would allow what you want to build there.

Since this topic has generated some interest, I will add my process to the topic.

First step is to determine if tearing down the building is the right thing to do. So I usually set up a field visit to walkthrough the building. I also check for building violations, current cash flow, rehab budgets( if it makes sense etc). I educate the owner enough to make a determination if the project is viable as a rehab or a teardown for new construction.

Once it has been determined that the building is beyond repair, we consider new construction. If the comparables in the area prove that a multi unit makes sense, then I compile some similar properties and figure out what was built: Area, materials, number of units etc. Most often someone has already done what you want to do in the area. For a three story building, you have to use masonry construction in Chicago. So use $150-$160/sf as general cost of construction. Reverse determine how much area of building you can afford based on your cash on hand and pre-approval. Determine if the project is still viable based on how much you can afford to build.

I do a zoning analysis after I do the financial analysis since it helps determine the project direction. If zoning does not allow you to do what you plan to do, I usually consult my zoning attorney to check out other options. We recently went with a zoning change AND a zoning variance for a Project since it made financial sense to spend the time and effort to go through it.

Getting to the design and permits comes after a long way into the process. In summary, I put my architect/GC/ Broker hats on to evaluate the best direction for a project. I use the market data, client’s available financial resources, zoning and building code information to determine the best route for the project.

Thank you for reading my elongated post. Each project is unique and you have a consider a variety of information sources before you make a decision. To simplify, My motto has always been “Let money show you way”. Hope this helps.

Prashanth