All Forum Posts by: Anthony Mei

Using this new build as an example: https://www.redfin.com/IL/Chic... . It's two units and they're asking $1.4m. The top unit is a 1800sq ft. 3/2 simplex. Bottom unit is a 3500sq ft. 4/3 duplex down. Sold as vacant land a year ago for $242k. I looked up permits and the cost to build is listed as $465k. Is that $465k really what it cost to build this entire new construction of 5300 sq ft. total? Does that include all their costs, or only certain things? If the $465k is accurate for all in, then that's only $87/sq ft. which seems insanely cheap...Or is that $465k cost listed in the city records just an estimate that the developer has to provide to the city and it could be way off?

If the $465k for building costs is accurate, then that brings total cost to $707k (242 land purchase + 465 building costs). What other costs have to be considered when looking at the fact they built this new and it took a year. I assume just property taxes, insurance, and mortgage interest right? Since this was vacant land the prop tax are super low. Is it fair to say the carrying costs for the year were probably just like $5k-$10k? If so, then let's say the total cost all in is $720k. Is this likely on the right track or am I way off?

I assume this has to be a developer or investor that already has a team that took this project on right. So are they really going to profit nearly 100% before tax if they are able to sell it for $1.4m? Assuming $1.4m sale less ~720k costs. That seems crazy. Or am I missing something. Assuming the sale proceeds all go to the current owner of the property who did this new build, if that individual has to pay taxes on $700k of income gains, I guess that's pretty high at maybe 35% or so, so say $240k goes to taxes. They still walk away with $460k profit here? Am I on the right track or am I wrong anywhere in my numbers and thoughts.

My last main question is, let's say a normal person like myself had bought this vacant land and wanted to build this new 2 unit. Without any connections or a team, how much $ would I be looking at to spend to commission this project if I wanted it for myself. I have to assume it would be way less than $1.4mil which is the asking price, but I also assume there's no way I could do it for $465k since I am guessing the building costs are only that low because whoever owns this property currently has a team in place and can do the actual work/get materials way cheaper than I could as a normal consumer? And as a normal person I would have to pay a premium for a GC/sub-contractors right, whereas whoever did this is probably a GC themselves or doesn't have to pay those premiums? So let's just say I bought this land for $242k myself and I wanted to build this exact multi. How much would I have to pay a GC to make it happen? $700k? How do I go about thinking about it or determining how much more it would cost a normal person compared to a developer/investor etc. 

I'm also still kind of shocked and thinking I must be wrong about the costs since this building is 5300 sq ft. living space and was able to be done for $720k ish all in? I just think that's too cheap right? Or is that really how much of a benefit a developer or someone in construction can get a project like this done for? And then they can just charge a premium to public buyers for the 2 units..honestly even at $1.4m, this only comes out to $264 sq. ft which still seems pretty cheap compared to other things I see in Chicago for higher end units/sfh's ($350-$450+/sq ft)

Would love those of you more knowledgeable about new construction and the finances around real estate to chime in here. 

Thanks @Angel Sida that makes sense!

Thanks @Mark Ainley

one thing that still stumps me then is the rule mentioned that an RS3 requires 2500 sq ft of lot size for each unit to be valid. Even taking this 1644 n Troy example then, it’s only on a standard lot so that’s 3150 sq feet. Yet there are 2 legal units on this one…?

So is this house simply allowed to maintain 2 legal units and also allowed to do major renovations to both units simply because it is “grandfathered in” - since it’s deemed a 2 dwelling property because of its 2-11 property code, is that it? so therefore the 2500 lot size per unit rule just doesn’t apply to it? when the owner or investor decided to significantly rehab the home in 2022, the city didn’t have any issues with letting them do so even though there’s not 5000 of lot size to satisfy 2 units?

Thanks @Angel Sida! Didnt realize that RS3 can be a 2 unit without having to rezone to RT4. does that mean any RS3 residential home can choose to deconvert a single fam to 2 units or it’s still required that a property is coded as the 2-11 multi unit designation id assume?

curious what some of the factors are that you’re thinking of which may be required to determine if an RS3 home can be rehabbed as 2 units or not 

I see thanks for the responses. Was just interesting to me since I saw it as RS3 which I thought means single family only but maybe you guys are referencing more official sources that show accurate zoning for an address

@paul 

@Paul De Luca , if the assessor site shows a property as “apartments” for description even if it’s use is listed as single family, then that means it’s actually a legal multi unit and can be turned into 2 units? Or not necessarily  always true? 

Isn’t it odd that the Chicago zoning tool marks this address as RS3? What can I use to officially know if a property is a legal multi unit or not. Or is there no true way to know soemtimes except for actually seeing documentation from an owner?

https://www.redfin.com/IL/Chic...

This house is advertised as a 2 unit but it’s zoned RS3 it seems based on database. The description says “zoned in law” for the top floor unit. What does that even mean? Is that a thing for Chicago or is it just a made up term

Is whoever renovated this just not following the city and they turned a single family into a multi unit when they shouldn’t have? Or is this house somehow actually a legal 2 unit?

 Total..not per floor 

Thanks @Brie Schmidt very helpful info. Is there a % of how likely it may typically be that a request is approved to allow a zoning change from RS-3 to RT-4? Or it's always a longshot/just dependent on how the alderman is feeling? Most of the houses in the area that are not RS-3 do appear to be RT-4 (not RT-3.5) although there aren't many since the majority are clearly RS-3 which now makes sense to me based on your explanation that side streets were redone to be RS-3

So I checked the zoning map and surprisingly the property is showing as RS-3. I did expect it to be RS-4 because while only my parents occupy the building and only use the first level, there is a separate door for the ground/basement level and i do think historically (ie: many decades ago, it’s an early 1900s build) the house was used as a multi unit or was intended to be..however when I check the cook county property tax website, they do have the house listed as 2-11 for the property classification code which is a “multi family with 2-6 units” (instead of some the other 2- classifications that would be for a sfh).

So am I out of luck if the zoning map is showing RS-3 or do I have a potential argument to make to have it rezoned to RS-4, considering the 2-11 code classification. I would think that might help? This was all just my quick research checking the zone map and prop tax site, and my thoughts about it..so curious what you knowledgeable people may think - possible to build a 2 unit one day on this land or is it just a pipe dream? And if one was to request a rezoning is it a very difficult formal process and requires me hiring any parties, or is it just a written request to an alderman/the city and something I can do on my own to get an initial response to see if it’s possible and would be granted?

I also doubt this information matters, but there’s 4 other homes on the same block, and 2 of them are also 2-11 and the other 2 are sfh’s

 Thanks for the response. Completely acknowledge this is a super vague question on my end..but was just hoping to get some super rough idea of costs if something like this could be feasible. I'm curious what you mean by how I am going to fund the construction as I don't think I mentioned the method in my original post? I suppose my thinking was to put down 20-40% and take out a mortgage/loan for the rest, if that's still a normal/valid option for new construction - if this is something I would actually potentially do in the future (couple years down the road), I would say there's also a chance I'd fund 100% or the majority of it in cash, if that makes things easier to make a build happen, and if cash is an acceptable option.

I guess $170/sf sounds quite cheap to me? I was thinking this may end up having to be $250-$400+/sf...maybe I'm being naive and of course still don't understand all the complexities for doing a new build in Chicago. Is this as simple as saying I could build a 2 unit home with a developer, let's say 2500 duplex down unit and a 1500 simplex on top, for $680k all in then (obviously just hypothetically based on 4000sq ft living space @ your $170/sf figure)? Or that $680k just the actual cost for the developer to build it and then they would charge me a certain $ markup or % markup on top of that? So effectively making the $/sf for me as the buyer more (that would make more sense to me and is what I'm thinking you might mean here. If so, any idea what my effective price would be as the buyer)