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United Mechanic Builds Rental Empire, Keeps Day Job
The rewards of being a Chicago landlord are expected to continue to meet the demands. In Chicago, 57 percent of residents are renters, according to Judy Roettig, executive vice president of the Chicagoland Apartment Association, whose 300 members own or manage 130,000 rental housing buildings in the metro Chicago housing market.
"Not only is Chicago a rental town, it is a city of small rental buildings that make up the neighborhoods. Rental housing is a very strong element of every community," said Roettig, whose members' rental buildings are usually nine units or less.
Overall, two-thirds of the city's rental buildings have fewer than 50 units. "The high-rises, while very visible and part of the city's architectural landscape, are the exception," she says. "Many people purchase small rental buildings as a way of having a stable place for themselves. [They] understand the investment value. It appreciates and allows them and their children to certain level of financial security." Roettig says the exact number of rental property owners is elusive since so many properties are held in trusts.
Chicago's style of bootstrapped real estate has its roots among Eastern European immigrants and African Americans, some of whom came from humble beginnings and worked their way up from being janitors to being landlords to operating real estate companies. They endured the ups and downs and often bought in troubled neighborhoods with low property values. In some cases, they are leading the way for more affordable rental housing.
"Real estate is the perfect bootstrapping system for many people," said Tom Jackson, senior loan officer for the Community Investment Corporation, an Illinois not-for-profit mortgage lender that provides financing to buy and rehab multifamily apartment buildings in depressed neighborhoods. They're at work in Austin, Uptown, Edgewater, and on the West and South sides of Chicago.
"Many property owners have strong ties to the community and are very hands-on," Jackson said. "They understand the mechanics of their buildings and usually do their own work themselves or work alongside subcontractors."
In the residential rental market, property owners generate income from markups on rents, which typically must exceed expenses for the venture to be profitable. They accrue equity from increased real estate values and leverage that to purchase other properties.
