HEBRON – A Chicago real estate firm is betting it can turn a profit by fixing up and renting a collection of inexpensive apartments in Hebron, Harvard, Woodstock and Genoa City, Wis.
JCF Real Estate Inc., a commercial real estate firm based in Chicago, bought bank-owned multifamily properties with nearly 50 units in the four towns earlier this year. The company is repairing the run down apartments and plans to rent them out at higher rates, said John Fitzmaurice, principal and founder of JCF Real Estate.
"What I've learned is that these areas are underserved," Fitzmaurice said. "Not much attention is paid to these markets in the suburbs. There's a real opportunity out there."
The properties JCF Real Estate bought were originally part of a larger portfolio of bank-owned apartments, mostly in McHenry County. Kinzie Real Estate Group offered the portfolio, which included nine properties consisting of 53 rental units across 19 buildings, for $2.1 million. The portfolio was broken up and sold in three parts, with JCF Real Estate taking the largest share. The eventual sales price of all of the units was much lower than the intial list price, said Steven Maher of Kinzie Real Estate Group in Chicago.
Kinzie Real Estate Group served as the court-appointed receiver for the properties during the foreclosure process and later sold the properties on behalf of the bank that owned them, Maher said.
"There were significant maintenance issues from years and years and years of owner-deferred maintenance," Maher said. "They were severely distressed and in rough shape."
About 85 percent of the units were occupied. Tenants who paid rent and stayed out of trouble with the law were allowed to stay, Fitzmaurice said.
JCF Real Estate hired an affiliate, SR&J Construction, to renovate the properties. Projects include exterior renovations, landscaping improvements to the units and commons areas and interior improvements. Some of the units are getting cherry cabinets and other upgrades.
"We're really fixing them up," Fitzmaurice said. "They'll look brand new."
After the renovations, the apartments will be rented at slightly higher rates.
"If you buy them at the right price and put love and care into them, people will be willing to pay a little more to rent them," Fitzmaurice said.
Most of the apartments will cost between $500 and $800 a month, he said.
JCF Real Estate plans to own and operate the buildings.
"We're in this for the long haul," Fitzmaurice said.
Fitzmaurice declined to say how much the company invested in the properties, but said it was more than $1 million.
JCF Real Estate plans to buy similar apartment buildings throughout northern Illinois and southern Wisconsin, including some in Fox Lake.