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Old Posted Feb 1, 2013, 11:08 PM
the urban politician the urban politician is offline
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Join Date: Jul 2004
Location: Chicago region
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Quote:
Originally Posted by ardecila View Post
That "practically no construction" is the problem; it's risky. Try getting a bank to lend to a project in a market with no new construction in decades. Remember that the Harper Court project is hotel, retail, and office - the residential tower isn't funded yet.
^ Banks have financed plenty of apartment rehab projects in recent years in Hyde Park (Del Prado just being one example). Clearly there is enough data present to determine market rents/occupancies, etc in the area to give lenders an idea of the risk.

In addition, there are many neighborhoods on the north side of Chicago that have had very little apartment new construction (at least major projects) in recent years. Again, the emphasis is on apartment construction, not condo construction.

So I'm not sure that the argument that "lack of new construction" as a reason why residential apartment building projects are slow to find financing in Hyde Park necessarily applies. Lenders care pretty much about 3 things: 1. how deep the pockets are of the borrower, 2. the borrower's history and experience, and 3. the likelihood that the project will generate enough income to pay the mortgage without default.

I see no reason why this determination can't be made pretty easily in Hyde Park just as in any other Chicago neighborhood. SamintheLoop, do you want to chime in?
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