Impact Investing in Chicago with Moses Hall

The interesting thing about Chicago, it’s literally a block-by-block thing, and the only way to really learn that is to have boots on the ground for you. And so that’s what. Someone like me comes into play and navigates the Chicago neighborhoods and understands the dynamic of each area.

And also I want to, I cannot stress this enough to every investor, especially if you’re not local to your property and investment property, your property managers. The property management company is the key to your success. And I think people try to scrape dollars. Oh, I don’t want to pay someone to all they do is collect rent.

If you hire a phenomenal property management company, they are supposed to be your strategists. They are supposed to be. Go in and tell you, oh, Hey, we noticed that the water bill is a little bit high this month. I think you should. Or, Hey, we foresee this happening. I think you should push in for this or, Hey, there’s a vacancy.

I think if we put the rent here, we can secure a tenant at this. So your property manager is your eyes and ears. Once you’ve acquired this investment. I think what happens is especially here in Chicago, His investors, get excited about the pricing and the numbers. You can get a 13 unit apartment building for under a million dollars here in Chicago.

I know in California, you can barely get a two-bedroom teardown. So when they see, oh my God, I can get a whole, apartment building for under a million and their eyes get big. And they’re just looking at the numbers on the sheet, but then when they actually buy. And they realize it’s not operating the way it started it on the paper or the offering memorandum they saw.

Then they’re like, in over their heads and they’re stressing because it’s not performing. But if you have the right property management company, they can definitely turn that building around. And so I think that’s important. I want to stress to investors please take the time to do your due diligence on interviewing the right property management company.

Don’t just go for the cheapest or the largest go for the one that works. Good for your investment property. 

So that is an interesting, very good point. I’ve been in a situation in the past where it wasn’t working out with a particular property manager, so we had to find actually more than one situation.

We had to find a new one. But finding that new one is very difficult and I’m thinking of one in particular. There’s a limited supply of alternatives in that case. Yes. Is how much does that happen in Chicago? Particularly in, I don’t want to be, I don’t intend to be rude about this, but if we’re talking about lower-income, maybe more kind of dangerous areas, if you will, what are your options? 

There are not many. And so what happens is sometimes there’s a conflict of interest. If you get a property management company and they already own a thousand to 2000 units for themselves so what gets a priority, their buildings versus your little 12 unit that, you bought and you think that’s going to get the most attention?

I think the, what you do is you find that property, that middle kind of. The property management company can be in the weeds with you and grow with you as you grow your portfolio. As you said, don’t always go with the cheapest. Don’t always go with the most well-known you have to go and really sit down with them and see if they have a strategy.

Like you’ve mentioned their property managers are hard to find and what else. People do is they sell these ambassadors to train them. We can do this via, and then you get it. And then you realize, and I’ve literally walked into a bill. A multifamily building, walking with a shone with a buyer.

And there was a shutoff utility notice under the door because the property management company did not pay the utility. And so the seller’s agent literally called the seller like, oh my God, do you know that this, that I, he immediately fired them, but that’s what I’m saying. Little things like that. It can literally cost you your operation.

And so it is hard to find good property managers, but a steady, when you do find someone you like you say that you treat them well, you take care of them. And I, the incident. For certain property management companies is as you grow your portfolio, they can manage your portfolio. I think the way that property managers generate income is more so from the portfolio, how many do they manage?

And so if you grow with them, Then it makes sense versus, if you have the little three, four-unit, it’s not as, as enticing. So to your point, there, there is a challenge in finding good property management companies, because I always get the calls when the investor’s upside down and they just want to get out of there and basketball.

I have to do the, I, I literally have sold a building where I didn’t even have keys. I didn’t have anything. I literally had to ask a tenant to make a copy of their key, to get access to the main door. Yeah. So, I’ve been in all types of crazy scenarios, but I was able to get the building. So multiple cash offers, we got it done even in the craziness, but as I said, property management is key and for any investor out there, I definitely want to stress the importance of that.

Now, one of the things that I think about here is like, for someone that’s concerned about investing for impact, You’ve met it. We’ve touched on a few different asset classes, whether it’s you mentioned retail a little bit earlier, we talked a little bit about residential apartment buildings, things like that, in your opinion, where is the best impact to be had?

Is it fixing up our retail location and, basically helping someone abroad, jobs and housing, what do you think? 

Ah, that’s a little bit challenging. It’s like the chicken or the egg, which came first. Kind of work hand in hand, I will say the last thing that ever comes to any type of community is a hotel.

So we go, that’s like the last thing that ever comes to any area, but in terms of housing or. Jobs, but normally people move to certain areas for work. Amazon has definitely been busy building warehouses here in the Chicago land area, which has provided a lot of opportunities for people moving to certain communities and things like that.

So typically jobs bring about people moving to certain areas, but also certainly. Companies don’t move to certain areas unless there’s a dummy. So it’s it really depends on the market. But w what we’re seeing is there is a need for affordable housing across the board. We see that in certain markets like New York and California, where they have.

Certain legislations such as ranked control. We see that it doesn’t work in the intended purpose. We can all agree that there is an affordable housing issue, but rent control is not the way to proceed. A comes from a federal level state level in terms of enticing developers. Because like I said, I work with developers.

If it costs me the same amount to build a luxury high-end. Building versus a low-income building, but my returns are higher. Do you know what I’m saying? I would go with the luxury. And so I think when we talk about rent control and development. It has to come from a federal state level in order for those community impacts to make sense.

Okay. Now bit earlier, you mentioned folks getting someone like you on their team and correct. I think, especially for newer folks that, that want to get into commercial. They don’t really know how to approach a broker. It’s not the same as buying a house on the MLS. Correct. So what’s the best way for someone to set themselves up for success.

If they’re coming and tracking a Moses hall down and they want to invest in the area, how can they basically get you to take them seriously? 

The way I work is I answer all inquiries, all questions. That’s why I’m excited to be on this platform to share my knowledge. The way to get taken seriously by brokers is to be consistent.

Build relationships, especially if you’re local in the area, if there’s a networking event or something like that, you definitely want to build those relationships. As you said, a lot of times, as you mentioned, there may be tire-kickers people calling, oh, I’m looking and they didn’t have down payments, but I think the first hurdle is getting that first deal done.

When you show a broker that you can get one deal done. And it’s a smooth process. The rest is history. They’ll send you all their listings before it hits the market. They’ll you know, I think the biggest thing is getting that first deal done. Once you show a broker that you can close a deal, then the rest is history.

But like you say, you definitely want to. Reach out, send messages. And like I said, sometimes it may take if you are. Cause as I said, not every investor is a full-time investor. As you say, you may work on nine to five jobs and you may say, Hey, I have about. A hundred K sitting, in this account.

And then my cousin has 100 K, we want to take 200 K and take down a partner building, Hey, how can you guide us? And I think that’s, you got to keep that in mind, everyone doesn’t do this. Full-time so they’re looking for someone to guide them because like I said, it just sitting in a little savings account, getting zero 1% versus, Hey, I can tell you.

Take that same money invested. Cause you got to think about it. Like all you’re literally doing is taking money, acquiring that, buying a property. And that’s why I said your property management company is really doing all the day-to-day operations. They’re handling the calls from tenants. They’re renting it out.

They’re maintaining it. All you’re literally doing is sitting back and collecting money. What if I could tell you, you take a hundred K and you’re going to get back 50 K each year. And net operating income. That’s a pretty good return. Yeah. That’s pretty if you could take a hundred K that you got sitting in a savings account somewhere and invest it and get 50 K back a year, still working or nine to five or corporate job, so I think it’s important to build a team, not just having a broken. But having property management, having contractors, having a good insurance agent, there are so many things having a good, and I know it varies market to market, but here in the state of Illinois where an attorney state, so, we use attorneys to close.

But they do add a lot of value. A good attorney adds a lot of good value and does your due diligence when acquiring these properties. Cause as I said, a lot of times people buy these properties, they haven’t done the correct due diligence. And then they see that it’s not operating the way it was stated.

And now you’re scratching your head. Why didn’t my attorney tell me this? So yeah, so I think it’s crucial to build a team and I think the way to really build a relationship with a broker is to get that first deal done.