Thousands of apartments are flooding the market in the South Side after the collapse of two landlords, one following charges that its owners orchestrated a $100 million Ponzi scheme.
The situation, first reported by Crain’s, has created an opportunity for investors hunting for distressed properties in what is still a rental-heavy local market. It has also created instability in the area.
Florida-based Equitybuild, which owned over 1,600 apartment units, collapsed following charges that its leaders — Jerome Cohen and his son Shaun — bilked $135 million from over 900 investors, according to the report.
Better Housing Foundation defaulted on over $84 million in bonds the nonprofit used to pay for around 1,000 apartments. Additionally, the city cited the company for 6,000 code violations.
“What you see time and time again is that these low- and moderate- income neighborhoods seem to be vulnerable to these fraudulent real estate plays,” president of Community Investment Corp., Jack Markowski, told Crain’s.
About half of the buildings and units have sat vacant and are now uninhabitable.
Daniel Grois is a Chicago investor who recently purchased a former EquityBuild property and has several others under contact. He told Crain’s that opportunity exists, but added, “it’s not for the faint of heart.” [Crain’s] — Jacqueline Flynn