What chutzpah!

Have been following a listing in Highland Park for a little while and wanted to share it with you all.*

It’s a decent-size deal in a good area at a somewhat reasonable price. So, what’s the big deal?

If you dig into the listing info, you will see that the building has an underground parking area, which is highly unusual for a building of this vintage in this area.

And if you check the permit record, you will (likely) come away convinced that the parking area was built entirely without permits.

Now, as many of you know, I did some un-permitted work early in my career, for which I paid dearly (so dearly that we never, ever do it now).

So I’ve been a cowboy. But I’ve never seen anyone cowboy in an underground garage… that is truly amazing. Undermining a building without the supervision of city engineers / inspectors is asking for major trouble in the event the thing collapses.

*Note: I’m not sharing the listing itself because I don’t want to cause trouble for the owner or listing broker, both of whom are honorable people, to my knowledge.

363 S Leslie is fully leased

You may remember 363 S Leslie, a 4plex we recently completed in Highland Park. Here’s a pic to jog your memory:


Am happy to report that leasing is done.

Better yet: Our rents came in materially higher than we originally pro forma’d. So, instead of the 6.3% unlevered yield we expected out of the property, I think we’re looking at more like 7%.

When you consider that people are buying crappy buildings with all kinds of deferred maintenance at prices equating to 4% unlevered yield, you can see why our business model is popular with investors.

Another new one in Highland Park

Just finishing up another building in Highland Park that I think might interest some of you.

Unlike many of the apartment buildings we renovate, this one was built by someone who cared about the people who would live there. The ceilings are pretty high, the units have a ton of light, there is parking and private outdoor space, etc.

We did this one on behalf of an investor with whom we’ve done a bunch of deals. Candidly, wish this one were mine!

Here are a few photos:





The units will go online for leasing this weekend, I believe. Prices are between $2695-2995.

Now leasing: 363 S. Leslie Way

Thought you would appreciate seeing some pics of our latest project, 363 S. Leslie Way, a fourplex we just finished renovating in Highland Park.

Now, obviously, doing fourplexes is not an efficient way for us to put out capital. But our partner was in a 1031 exchange, the clock was ticking, and we liked the deal.

And I think we’ll hit the ball out of the park, since we forecast pretty modest rents.

Below are the pics. If you’re interested in renting one of these beautiful 2 bed / 1 bath apartments with parking and options for private outdoor space and / or office space for around $2300-2400, email krystal [at] adaptiverealty.com.





Some thoughts on windows (zzzzz….)

Today, I want to talk about windows.

Still here? Good.

Windows are a controversial part of the repositioning process. Replacing them is pretty expensive (on the order to $400-500 / window) and, while new windows open / close easily and look nice, no one ever rented an apartment because of the windows.

Still, we intend to own our buildings forever, so we replace all the windows, as a rule. In the rare cases where tight budgets caused us to forgo replacement, we over-performed on the rent and then wished we have spent the additional money to do the windows when we had the chance.

So, we’re into replacing windows. But doing so is dangerous to your project, and here’s why: They’re a massive source of delay.

Think about what happens when you order windows for a small rehab project. The rep for the window company needs to come out and carefully measure each of the windows you plan to replace. Then, he needs to record these measurements accurately, along with your aesthetic choices (frame material, opening direction, etc.). Finally, he needs to forward your specs to the factory, where the windows are produced over the next 3-5 weeks and then shipped to you.

The above is a painful process and its easy to make mistakes. And here’s the kicker: If you make a mistake on the order, there’s no way to correct it quickly. If, like happened to us recently, the window guy accidentally orders the wrong frame material, your entire order may need to be re-done, imposing a delay of a month on your project.

And there’s nothing you can do about it.

Just another problem that you need to manage around if you want to reposition apartment buildings the right way.