Jan
12

Chicago-Area Redeveloper is a Great Success

January 12, 2013

chicago real estate investment

Some redevelopers just want to make a quick buck, but Chicago-area MACK Companies is focused on long-term appreciation and value. Based out of Tinley Park, MACK is Chicago’s largest redeveloper in the single-family investment class.

At the end of 2012, American Residential Properties (ARP), a real estate investment trust based in Scottsdale, Ariz., paid $28 million to acquire 196 single-family properties from MACK, which the redeveloper will continue to manage. MACK will also supply ARP with more than 30 properties per month during the next two years. According to MACK’s president, James McClelland, the ARP deal was the largest redeveloped single-family transaction of 2012.

The main reason MACK has become so successful is that they only buy homes in areas that will produce the best returns, then wait to sell these properties under the right market conditions. This strategy works in Chicago, because while rental rates for apartments are rising, the city still has relatively low rents compared to other large U.S. metros.

The average rent for a Chicago one-bedroom apartment is $1,091, while a one-bedroom apartment in New York costs an average of $2,568 a month. A one-bedroom apartment in Los Angeles rents for $1,552 and in D.C. a one-bedroom will cost you $1,963 a month.

A typical single-family home purchased by MACK costs between $50,000 to $60,000, and the company spends about $40,000 in renovations. A majority of the renovated Chicago homes feature standard floor plans with four bedrooms and two baths.

Looking ahead to 2013, MACK predicts they will convert and sell more than 500 units, and the redeveloper is even more optimistic about 2014, when they predict sales will top 1,000.

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Jessica Thom

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