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Show Summary
In this conversation, real estate developer LeVar Love shares insights into navigating the complex Chicago real estate market, discussing the challenges of urban development, the impact of regulations, and the importance of understanding tenant laws. He emphasizes the need for strategic planning and staying power in the face of market fluctuations, while also highlighting the growing trend of urban sprawl and the opportunities it presents for investors.
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Investor Fuel Show Transcript:
LeVar Love (00:00)
Man, how much time do you have? Because that’s what it’sSo the reality of it is, if you’re touching, ⁓ especially one that if it’s not just a kind of what we like to say lipstick on a pig, if you’re actually doing some major renovations, you’re bringing in the mechanicals, as we say, HVAC, electrical, plumbing, things of that nature, you need a full set of architectural plans. They do not care.
So to get a full set of architectural plans in the city of Chicago these days, it typically takes about six weeks just to get your full set of plans and for the architect to download them to the city or get them over to the city.
Dylan Silver (02:10)
Hey folks, welcome back to the show. Today’s guest, LeVar Love, is a real estate developer and entrepreneur in the greater Chicago market. You can find him online at rosieinvestment.com or across social media at rosieinvestment. LeVar, thanks for taking the time today.LeVar Love (02:28)
Hey man, thanks for having me. Pleasure to be on.Dylan Silver (02:31)
It’s a pleasure to have you, pleasure to meet you. And we were talking before the show about really, you know, Chicago being one of the top markets in the country. There’s a lot of competition. There’s also a lot of regulation that comes with that. We were really talking about, you know, how there’s little, you know, sections of each part of Chicago that are run by an alderman, right? And I was mentioning how this is a new term to me. But of course, anyone in Chicago who’s in the business that you’re in is familiar with this.When we talk about developing in Chicago specifically, What’s the on-ramp for this like? Because to me, as an outsider looking in, it seems like there’s gotta be an established group of people who are doing this. And to get in doesn’t seem like the easiest thing to be doing.
LeVar Love (03:18)
So what I would say is if going back when I started out in Chicago land, I didn’t start out in inner city. I actually started out in the suburbs. there’s several, it’s what they call Chicago land. So in Chicago land, there’s several small municipalities where the barriers of entry are just a little lower, if that makes sense. And the risk aren’t as high, right? So I started out in the Chicago land area in the Southwest suburbs.And then as I built my network up, I moved more inner city. I got connections with different departments in the city. What I would tell you, you really have to understand kind of the city of Chicago’s code. It kind of has its own code. So I would learn the suburbs first, right? Pick me a municipality that I’m more comfortable with. And then as I grow, as I understand the landscape a little bit better, then I would move inner city Chicago.
where the prices get higher and the risks get higher.
Dylan Silver (04:19)
Now, when we talk specifically about going from the suburbs to the inner city, know, one of the things that comes to mind for me is that you’re now dealing with like a longer deal timeframe, permitting processes longer, things can change, right? So walk me through that process from going into that urban sprawl to then dealing with, you know, some of the parts of Chicago itself where there is kind of that, that, you know, leeway period whereyou might have to say, this deal might, we might not be done with this for a couple of years, right?
LeVar Love (04:51)
Man, how much time do you have? Because that’s what it’s like.So the reality of it is, if you’re touching, ⁓ especially one that if it’s not just a kind of what we like to say lipstick on a pig,
if you’re actually doing some major renovations, you’re bringing in the mechanicals, as we say, HVAC, electrical, plumbing, things of that nature, you need a full set of architectural plans. They do not care.
So to get a full set of architectural plans in the city of Chicago these days, it typically takes about six weeks just to get your full set of plans and for the architect to download them to the city or get them over to the city.
Once they’re with the city, they’re kind of two different pathways you can go. The first pathway is what they call the architect, which is self-certified. Now here’s the thing, only projects that don’t have any city violations, like any issues,
with the city already can go self-serve. If your project cannot go self-serve, it will typically take you about three months just to get the actual permit. So you take that three month timeframe to get the permit, add it to the timeframe it takes you to get your architectural plans. You’re talking about, you’re into this project four to six months and you haven’t even done anything yet. So take that into consideration and layer it with
Dylan Silver (06:59)
Yeah.LeVar Love (07:02)
Okay, now we have our construction timeframe and then our disposition on the backside once we finish construction and to get it on the market and get it sold. So it can extend that timeframe on a project extensively.Dylan Silver (07:16)
Now, when we talk about build to sell, I don’t have experience in this realm, but I’m imagining that a lot of this is going to be dependent on what the market looks like when it comes time to sell it. That could be entirely different from when you started the acquisition. So it’s almost like you have to factor in that there could be an entirely different set of conditions from when you even bought the land.LeVar Love (07:42)
100%. That’s why when I started out and I said, I would start, I started out in the Chicagoland area and other suburbs where I had a reduced timeframe to get to market because when this is where the risk rise, right? When you come into city Chicago, you’re dealing with a timeframe that just to get permits could be six months. Like think about that. You’re in a whole, a lot of times you’re in a different calendar year, a totally different season. All of those risks.Dylan Silver (08:07)
Yeah.LeVar Love (08:10)
have to be taken into consideration. It could be a totally different market by then.Dylan Silver (08:14)
Yeah, I mean, I’ve talked with so many ⁓ multifamily investors and developers who’ve walked me through exactly that, not just in Chicago, but in markets where there may be less regulation. And talking about, if we took on variable rate debt and then the rates almost doubled and then the cost of materials and a two by four increased dramatically. And then we’re dealing with rents maybe stabilizing or in some cases even going down in some places.I don’t know if that’s happening in Chicago, but I can say for like Austin, Texas, specifically, there’s an abundance of multifamily that it ends up, you know, putting some syndicators, some operators into some level of distress. Not because the property is distressed, the property could be brand new, but because you’re dealing with like this, you know, perfect storm of things happening that can affect your bottom line.
LeVar Love (09:07)
Yeah, 100%. A lot of times, so there are several developer or rehab or networks that I’m involved with. A lot of us who’ve been around a while, we say, look, you have to have staying power, right? So you have to understand cash flows. You have to have your reserves. You have to be really good at estimating those things when you’re talking about dealing with a major project in the Chicago land area.Dylan Silver (09:30)
Yeah, I mean, when we specifically talk about like your estimations and going into, know, what could be I mean, I’m thinking it’s got to be two, three years in most of these deals, right? Was that about accurate? Can you wrap them up in under a year?LeVar Love (09:46)
Nah, so it’s rare that it happens in under a year. If you self certify, if you can get a project that can get self certified, you can definitely wrap it up in under a year. Not a problem because you typically have your permits in about 30 days. If the project has housing violations,I gotta be specific about that, Chicago has its own housing court with its own judge. So if your house has housing violations, it’s probably not going to get wrapped up in a year because you could get a stay on your court date.
that last two or three months. Now, if you’re experienced at this, you kind of correlate all of those court dates while you’re waiting for that permit. And the judges are pretty good on working with you if they understand, hey, you’re trying to do right by the property. You’re trying to bring it into compliance. You show them that you’ve gotten your architectural plans. All of those things work in your favor. And that six month time frame of dealing with housing court on top of dealing with getting your permit, they work together. They work in your favor.
Dylan Silver (11:18)
What’s going to cause ⁓ a house or a property to go into a housing court? I’m thinking in my Texas thoughts, I’m thinking like a stop work order where some contractor did bad work. But what’s going to cause this to happen in Chicago?LeVar Love (11:31)
So that can cause it, but that is not the number one reason in Chicago. In Chicago, because of the density ⁓ in the marketplace, there are a lot of that are abandoned, not stabilized, have safety issues, code compliance. It could actually go into housing court for tall grass. That’s rare just for the tall grass, but there are lot of situations where properties, they’re abandoned and they’re not well taken care of.I’ll give you an example. a house that we’ve taken over several houses that have been vacant for more than seven, eight, nine years. And the gutters are falling down in the, the walkway on the side of the house. Well, that’s a safety issue. If kids are kind of running through the gangway or next door to the property, things of that nature, that is one of the probably top priorities that you’ll see a property in housing court because it needs what they call, ⁓ it needs stabilization. The property isn’t stabilized. It’s not in a good.
safe ⁓ space or place.
Dylan Silver (12:33)
Now this is interesting because what’s the I mean the judge I’m imagining doesn’t have do they have a lot of real estate training because how are they able to determine when when this has been you know taken care of.LeVar Love (12:46)
Yeah. So many of the judges have what they have. They’ve now been in housing court for a long time and they have an inspector. what they’re in the city of Chicago to the department of buildings, they have two sets of inspectors. They have inspectors that go out and kind of, you know, do inspections for your, you know, rough plumbing that’s now finished, your rough electrical that’s now finished. Then they have another set of inspectors that just go around and check these houses for safety compliance.They have what’s called the Troubled Buildings Initiative as well. if they, know, neighbors will call in and say, hey, this building’s unsafe. The Department of Buildings will send an inspector out to kind of do an inspection. What’s unsafe about it? What needs to be corrected? And then it’s that inspector with their expertise that comes back and reports to the judge what should be taken care of, the condition of the house, things of that nature.
Dylan Silver (13:39)
So are, I guess, are investors totally aware when they’re buying when a house is in housing court? And could they potentially be unaware and they find out after they’ve bought it that the house is pending a court date?LeVar Love (13:52)
They could 100 % be unaware. Yes, especially young investors, early investors. You could definitely get caught by surprise. But what I would tell you, in Chicagoland, to close a real estate deal, typically you have an attorney. know, state of Illinois guidelines is that you have an attorney. It’s your attorney’s responsibility to do the due diligence if you’re buying a property inside of the city of Chicago to make sure that it does not have violations or issues or things of that nature.Dylan Silver (14:20)
I want to pivot a bit here, LaVar, and ask you about the urban sprawl of Chicago. you know, when people are talking about, you urban sprawl in general, whether it’s Chicago, whether it’s Dallas, whether it’s, you know, New York City, right? So you tend to see, you know, it start with maybe some subdivisions being built, and then maybe you’ll have, you know, some business come in between. But Chicago, you know, one of our oldest cities, right? So you’re going to have massive urban sprawl anyhow.Is there more urban sprawl happening right now? Or is it maybe a little bit different? Is the commuting population now expanding further than what previously people thought was reasonable?
LeVar Love (15:44)
So in the Chicago land area, all of them are happening because what’s going on is that you actually have, now be candid, because of taxes, taxation, you have a lot of individuals that are actually moving over into Indiana. ⁓ basically Northwest Indiana has a growing population right now and less taxes, which is you could be in the most Eastern part of Chicago, you can be in Indiana in two miles.So it’s kind of like that situation. So it’s like, well, if I can reduce my tax situation by 20%, why couldn’t I just move two miles over and basically have the same commute to work and work in Illinois? Does that make sense? So that’s kind of one of the things that’s going on. And then the second piece is a lot of individuals, there’s a lot of kind of development in the South and West suburbs of Chicago. For example, ⁓ Amazon fulfillment centers that are going up.
industrial places that are going up in Bolingbroke, area called Bolingbroke, Romeoville. So a lot of individuals are actually moving out to those areas as well.
Dylan Silver (16:49)
Now, when new developments are happening, are you seeing like ground up, you know, development? this common? can’t, my, again, my outside perspective looking in is like, you know, probably ground up development. There can’t be too much vacant land. So most of the time people are, you know, renovating established properties. But I’m also imagining you’ve got some buildings that are just so old that that may be challenging as well.LeVar Love (17:14)
Yeah, so there’s a huge redevelopment kind of space where there’s a building there, but that building gets torn down because it’s been around since 1878. It would cost way more to try to bring the building up to code and things of that nature. So they’ll tear it down, buy the building almost for the price of the land, tear the building down, and then build new construction. So that’s happening in several areas in Chicago.even in inner city, kind of in this populated areas where they’re basically almost demo in an entire block or a couple of blocks and building new subdivisions, building new pockets of housing, things of that nature. I remember seeing in the news about a month ago where like a 200 housing development was going up in a specific area of Chicago.
Dylan Silver (18:04)
For folks who may want to invest in the greater urban sprawl of Chicago but don’t necessarily want to have to deal with all of the regulation of the city of Chicago itself, there cities on the outskirts of Chicago that you might recommend people taking a look at if they’re not familiar with the area?LeVar Love (18:25)
Yeah, definitely. I think that to me, the only thing that would distinguish it is the price point, right? If I had the money all day, every day, I feel like you can’t go wrong with the Naperville or Downers Grove or an area like that, which is in the West suburbs of Chicago. And then also, too, there are great areas, high demand, great school districts in the southern part or south of Chicago in areas like Homewood, Flossmoor. I mean, people are like they covet.like the school districts and things like this. So there are great areas outside of Chicago land that you can invest in and get a really, really good return on your investment.
Dylan Silver (19:03)
Now, I know one of the things that people always talk about when it comes to these markets, the Chicago’s, New York, Los Angeles, Seattle, very population-dense markets is, well, evictions can be somewhat challenging, right? that the laws may favor tenants and so forth. So how does this impact developers, right? mean, developers themselves are not always going to be holding the properties.But our developers taking into account even on that level, like, hey, this is what investors are going to be looking at. When they’re buying a property like this, they may have to go through a prolonged eviction potentially.
LeVar Love (19:45)
Yeah. So I would say Chicago does have very strict tenant guidelines. you, so I have a, basically a rental portfolio in Chicago. So I have it. So I’m very aware of it. think anyone that is, mean, basically it’s even in our leases where it talks about tenant, ⁓ the tenant guidelines, things of that nature. But what I will tell you, just like when you’re using an attorney to, ⁓ purchase the property, things of that nature.There are a lot of attorneys that are well, the same attorney that I usually use to purchase it, I, you know, keep them on board and we stay connected when it comes to if I have issues with tenants and things like that, because, you know, I’m all about, you know, scale and letting the subject matter expert handle it. It’s like they deal with so many of them. It’s better for them to just kind of, they’re dealing with your properties with housing court anyway, just have them reach out, you know, deal with whatever situation is going on with the tenant. So that’s how I look at it.
I like to leverage people for their skill set.
Dylan Silver (20:46)
Do you see that, and I’m imagining that this may happen, but I haven’t heard of this happening in other markets, are attorneys just generally more involved in real estate in general? Like maybe even on a property management side, if there are tenant issues, are attorneys just generally more involved in real estate?LeVar Love (21:04)
In the Chicago land area, yes. So that’s kind of one contrast I would make when I, you know, I have investments in other areas where I could deal with property for five or six years, never deal with an attorney at all, just deal with the title company, things of that nature. But typically in the Chicago land area, from the time I have a contract on it, contract review goes through the attorney all the way through, you know, tenant issues. So they’re a partner and part of my team from beginning.to end to disposition in the Chicagoland area.
Dylan Silver (21:38)
Yeah, that’s an interesting thing to have in there. I I can imagine for folks who are in some other markets and they’re like, well, we’re not talking to attorneys unless there’s a major issue. Having them basically be a partner with you from the beginning is a different way to do a deal. And I know that there’s more states that are looking at that, honestly. But we are coming up on time here though, LeVar. Are there any new projects that you’re working on? And then also too, what’s the best way for folks to reach out to you or your team?LeVar Love (21:51)
Yeah.Sure, definitely. So, yeah, we’ve got a major project that we’re partaking on. It’s a mixed use development. We bought one of those large 7,000 square foot buildings that I was talking about where you get it for the price of the land. And we’re going through renovation on that. It is a very exciting project for myself and my team. Anyone that wants to reach out to us, you can reach us at rosieinvestment.com. And here’s the thing. I remember back in the day when I was a young investor,
So I do a lot of coaching, lot of ⁓ consulting and things like that. So if there’s someone that’s trying to come into the marketplace in the Chicagoland area, they want some guidance, they want some consultation, feel free to reach out to me. I’m there, I’m here to help. I wish I had somebody like me when I started out in real estate that would take the time, sit down and maybe give me little guidance, a little nugget, you know?
Dylan Silver (23:01)
That would have been helpful. I can say the same thing for myself for sure. LeVar, thank you so much for coming on the show today. Thank you for your time.LeVar Love (23:04)
Yeah.
