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Condos Get a New Lease on Life

The beneficiaries of the condo bust now include apartment-hunters in West Rogers Park. Apartments in a classic Chicago building—a massive edifice of salmon-colored brick and limestone on the corner of Morse and Oakley avenues—that was being converted to condos in the waning days…

The beneficiaries of the condo bust now include apartment-hunters in West Rogers Park. Apartments in a classic Chicago building—a massive edifice of salmon-colored brick and limestone on the corner of Morse and Oakley avenues—that was being converted to condos in the waning days of the boom are back on the market as rentals. They now have the high-end finishes that condo buyers expected, yet they are renting at about 55 percent of the monthly cost that buyers might have paid had any of the units been sold.

“The renters get an amazing deal because we bought the building from the bank at 50 or 60 cents on the dollar” after the condo converter handed the building back to the lender, says Justin Elliott, the head of Chicago Apartment Finders; the company’s 18-month-old offshoot, Finders Investment Group, bought and is managing the building, called 2240 W. Morse. Even after spending what Elliott estimates at $600,000 on top of the purchase price to complete the renovation of the building—mostly on exterior work—the investors “can afford to put these on the market at a price that stands out,” he says.

Two-bedroom, two-bath apartments in the building carry a monthly rent of $1,300; add a den, and they go for $1,400. Compare that to the roughly $2,400 in monthly costs—including mortgage, property taxes, and assessments—that a buyer who paid $280,000 for the smaller layout would have been paying.

You can find two-bedroom rentals a block south for $795 to $900, and a few blocks north for $899 to $910. But those places don’t have the newly renovated kitchens with granite countertops, the built-out closets, the refinished hardwood floors, and the in-unit laundry of 2240 W. Morse. And the Morse apartments are freshly finished, not hand-me-downs from prior tenants.

“This is like living in a brand-new condo, but at luxury rental prices,” Elliott says. Renters have been quick to notice; 20 of the 32 apartments were leased in the first 30 days on the market, Elliott says. A prior project at 1520 West Birchwood Avenue in Rogers Park did well, too. At that address, three-bedroom condos that had been priced to sell at up to $380,000 were offered at $1,800 a month. The six units (some of them two-bedroom apartments) went relatively fast, Elliott says.

His group has more failed-condos-to-apartments projects in the works, and he says renters can expect to see many other similar bargains come on the market from other investor-landlords this year. Look for them, Elliott says, “in the peripheral neighborhoods, emerging markets like Rogers Park, West Rogers Parks, and Logan Square.” In those communities, failed projects from the condo-building boom are least likely to get revived as condos because buyers can now afford the more sought-after neighborhoods nearby.

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