There are currently 13 multifamily buildings on the market in Oak Park. Most of the available investment properties are traditional two-flats or former single-family homes that were converted into two units decades ago. One four-unit building just hit the market, and its evolution offers a glimpse into what it takes to make an investment in the multifamily market.
When Owen Li decided to jump into the real estate market in 2019, he was looking to find an investment property that he could live in and manage. In addition, he was looking for a rehab opportunity that would let him learn the skills behind managing a construction project from the ground up.
He thought he’d found the perfect opportunity in 617 S. Lombard Ave. in Oak Park. The four-unit building needed a complete overhaul, which offered the chance to learn the construction process in all its facets.
Once finished, he planned to live in the four-bedroom owner’s unit, while renting out the remaining three units in the building. He saw it as a good investment.
“I could live in one unit and the other three would pay the mortgage,” Li said.
For the first-time rehabber, the timing could not have been worse. With the pandemic hitting after he took possession of the building, the process of getting permits and bringing in contractors was put on hold for months. It took Li until October of 2020 to get through architectural review and get the permits he needed to do the extensive renovation the neglected building required.
Fortunately, he was more than ready to learn from the process.
“We had to do everything. HVAC, plumbing, electrical, inspections,” Li said. “Whatever I touched, I wanted to learn about it. I learned a lot.”
Unfortunately, the process took so long, that his personal plans changed. His young daughter no longer is interested in moving and starting a new school. Rather than live in one unit and rent the others, Li decided to sell the building to try to earn his money back.
Working with Berkshire Hathaway Home Services broker Fei (Yanfei) Hu, he recently listed the property for sale for $1.4 million. Hu notes that the three three-bedroom units are also listed for rent at $2,380 per unit. Parking is an additional $120 per space.
Hu states the two-pronged approach of marketing the entire building for sale while also marketing the three-bedroom units as rentals is a good idea in a real estate market that is experiencing softening rents and longer market times.
“It’s probably more attractive to a buyer to buy the property if the three units are already rented,” Hu said.
Each of the units is completely new and features higher-end finishes including stainless-steel appliances and quartz counters. The owner’s unit has a first floor with three bedrooms, a full bath, a breakfast room, an open family room and a kitchen with a large island with a built-in wine fridge. The lower level of the duplex has in-unit laundry, another full bath, a bedroom and a family room.
The three-bedroom rental units have identical layouts, including family rooms and eat-in areas of the kitchen. During the renovation, Li finished former sunrooms, adding insulation, heating and cooling to create year-round dining spaces off the kitchens. While the building itself is more than 100 years old, Li said, “Everything else is new.”
Hu says Li wanted to price the building to recoup some of his investment and notes that it is a good opportunity for someone who wants to be a landlord but doesn’t want to have to do any construction in this era of supply chain and worker shortage delays.
There are currently no other four-unit buildings for sale in Oak Park. A look at other two-flats on the market currently reveals a wide range of prices for them.
The two-flat at 1122 S. Oak Park Ave. is listed at $729,000. The two-flat was renovated in 2014 and, like 617 S. Lombard Ave., offers a two-level owner’s unit with four total bedrooms and two bathrooms. The second-floor unit has three bedrooms and rents for $2,000 a month.
The building at 64 Washington Blvd. in Oak Park is a short sale available for $599,000. Built in 1920, it has a first and lower-level duplex unit with four bedrooms and two bathrooms, and a top-level unit with three bedrooms and two bathrooms.
The vintage brick two-flat at 328 S. Ridgeland Ave. is for sale for $615,000. The traditional brick building includes two units, each with three bedrooms and two bathrooms.