Chicago is Rated Top Area for Buyers, Making Mortgage Profits More Alluring

Real estate investing in Chicago presents a unique opportunity for those looking to profit without being fully exposed.  Due to the economic chaos in the state of Illinois along with a backlog of foreclosures, the real housing market in Chicago has still rebounded totally from The Great Recession.Chicago real estate investing  That makes Chicago an ideal area for the issuing of private mortgages to buy real estate, rather than the actual purchase of the property itself.

A private mortgage is the financing provided for a property from an individual lender or a group.  According to Jerry Cohen, President of EquityBuild, a premier private mortgage investment firm, “There are two methods for getting started in private mortgages: Mortgage Pools and Direct Lending.  Mortgage pools are like the mutual funds of private mortgages. Each investor's money is pooled with the other investors participating in the pool and the money is used for private lending.

Cohen, who was just awarded the prestigious “Moving America Forward” honor for the success of EquityBuild and EquityBuild Finance, its financial arm, furthered that, “Direct lending is typically reserved for seasoned real estate professionals due to the level of expertise that is needed to identify undervalued properties...”

Chicago was recently rated the best market for buyers among 142 areas by Zillow, the real estate research group, as a result of three factors:

  • it still takes a long time (112 days) to sell a home;
  • of the homes being sold, 41 percent had to have the price reduced in order to sell; and
  • almost every home sold for less than the asking price.

That makes Chicago a great market for those buying a primary residence, but still treacherous for those buying investment properties.  It is particularly dangerous if the rental income from the investment property cannot cover the monthly mortgage and other expenses, as often happens.  For these reasons, it is far better to profit from the Chicago real estate mortgage by financing the purchases of others.

By issuing private mortgages, the provider can select to whom they lend and what neighborhood.  That offers a great deal of protection in Chicago, and every market.  There are neighborhoods in Chicago, that while down due to The Great Recession, should eventually rebound such as the Gold Coast, Lincoln, Park, and many more.  The same is true for many of the suburbs of Chicago.

Big Money is moving into Chicago real estate.  From the November 18, 2012 business section of The Chicago Tribune:

In April, housing research firm CoreLogic named the Chicago area one of the better housing markets for institutional investor funds. It cited the area's large number of foreclosures, which will increase the number of vacant homes, and the estimated rental income relative to the low cost of acquisition. (1)

For those reasons, providing a private mortgage is a better way to profit from the potential gains ahead in Chicago real estate.  It is certainly a bullish sign that institutional investors are plowing massive amount of capital into properties in the Chicago area.  But let someone else buy a vacant home: it is far better to finance only those that are the best investments with a selective, customized private mortgage.  Eventually, the institutional buying should lift the prices for all.  For those shrewdly providing private mortgages, the opportunities for profits will be even higher.

Source: chicagotribune.com (1)