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Old Posted Feb 4, 2013, 1:21 PM
SamInTheLoop SamInTheLoop is offline
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Join Date: Sep 2006
Posts: 5,226
Originally Posted by the urban politician View Post
^ 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?

I agree with your assessment of what lenders find important, although it might also be a bit of a higher hurdle to be the first large, institutional quality apartment tower in a neighborhood or more general part of the city in many years. While I haven't looked at the fundamentals data for Hyde Park, my guess is it's either there already or just about to be supportive of the type of construction financing we're talking about (in addition to the main factors TUP mentioned)....
It's simple, really - try not to design or build trash.
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