Chicago Expands South Side Home Rehabilitation Financing

Chicago just made flipping neglected homes on the South Side a lot less risky.

The city is expanding its support for small developers rehabbing distressed homes, offering to fully cover property acquisition costs and provide gap funding to reduce financial risks, Crain’s reported.

The Rebuild 2.0 program, announced this month, will focus on 33 vacant or derelict properties in Roseland and Englewood. The goal is to help small firms revitalize clusters of homes rather than isolated properties, a strategy city housing officials say will yield more visible block-level impact.

“We need to help fill some of the gaps between what it costs to put these seriously deteriorated properties back into productive use and what the market conditions are,” said Chicago Housing Commissioner Lissette Castañeda.

The city will cover the cost of acquiring properties from the Cook County Land Bank Authority — typically about $35,000 — and commit to backstopping the difference between a rehab’s total investment and what the finished home can command in the market. That structure replaces a case-by-case support model used in previous rounds of the Rebuild initiative.

Backstop funding should allow developers to list homes closer to local market prices, and lower asking prices could help offset the impact of high mortgage rates on potential buyers.

Developer LeVar Love, whose Rosie Investment has worked on four rehabbed homes through the Rebuild program and contributed labor to dozens more, told the outlet his past projects broke even after accounting for acquisition, renovation and resale costs. In one case, a home on South Honore Street in West Englewood sold for $228,000 but left him with zero profit.

A previous round of the program funded 100 home rehabs and supported over 850 subsidized employment opportunities in South Side neighborhoods.

The Rebuild initiative is part of a broader effort to convert vacant homes into affordable, owner-occupied housing and expand opportunities for developers of color. City officials say the program is designed to stimulate long-term neighborhood investment and economic development.

— Judah Duke