How Social Impact Investing in Real Estate Makes a Difference in South Side Chicago
House flippers in Chicago, or anywhere else for that matter, don’t often get credit for facilitating social change. In fact, many real estate investors, unless they’re on television, get a bad rap for buying, renovating, and selling houses because they’re sometimes viewed as profiting at the expense of others. But, in reality, that couldn’t be further from the truth. This is especially true of the investors who’ve helped to revitalize Chicago’s South Side. There, the social impact of real estate investing can be felt as much as it can be seen. And one investor, in particular, has been committed to creating positive change in the neighborhoods of Chicago’s South Side for years.
The Social Impact of Investing in Real Estate
Since the late 90’s, Mike Tassone has been buying investment property in Chicago, including in the South Side, to rehab and rent or sell. He initially invested part-time as a way to earn extra money. But, as the years progressed, so did his respect for the business and for the people he bought from and sold to. So, by the early 2000’s, he found himself investing in real estate on a full-time basis.
When the housing crisis wrecked the ability of thousands of Chicago homeowners to pay their mortgages, it also ended the careers of most real estate investors. And, perhaps, that’s as it should be. Because, before the crash, flipping homes in Chicago lent itself to profiteering between parties who’d take turns raising the sale price of a home so that bigger and bigger mortgages could be taken out. After the crash, stricter lending practices were implemented. The investors who didn’t lose their shirts were those who’d never compromised their standards to begin with—investors like Mike Tassone.
So, when lenders began foreclosing on South Side homeowners, Mike was there. He bought, rehabbed, and sold houses in several neighborhoods, even though the market was unstable, and contributed to the rejuvenation of some of the harder hit blocks. His efforts, and those of investors like him, helped turn around over 500 properties in five South Side zip codes in the last ten years, according to Crain’s Chicago Business. And the renovation, and reselling, of those homes created jobs, increased property values, lowered crime, and sparked even more interest in investing in Chicago’s South Side. Soon, would-be homeowners who would have never considered moving to the area were turning toward neighborhoods like Chatham, Beverly Park, and Morgan Park.
But, buying foreclosed homes in Chicago eventually became a competitive business and it didn’t do much to help the plight of homeowners who were foreclosed on either. So, Mike and his team searched for a way to approach distressed homeowners before they lost their homes. He says that “after the crash, we wanted to get back to the fundamentals of why we got into real estate.”
HomeVestors is known as much for its ethical business practices as it is for its nationally-trusted “We Buy Ugly Houses®” ad campaign. In addition to being trained on all the ins-and-outs of investing in real estate, franchisees are guided in how to be fair and compassionate when dealing with distressed homeowners. But, the franchise, which has been around since 1996, also tends to attract the kind of investor who already knows that helping homeowners out of “ugly” situations is a key component to long-term success as a real estate investor. So, the fit was a good one for Mike.
Real Estate Investing in South Side Chicago Benefits Everyone
The reasons why South Side properties fall into disrepair are important to keep in mind. People fall behind on caring for their homes and paying their loans, for a number of reasons and they’re rarely happy ones. Job loss, divorce, death, and even changes to local tax codes—like the recent hikes in Chicago property taxes—place homeowners under financial duress and, at best, prevent them from affording the upkeep on their houses. At worst, these stressors cause them to lose their homes outright—especially, Mike notes, for people living paycheck-to-paycheck or on a fixed income, like retirees. On that point, he says, “even a small tax increase can push people over the edge to where their home becomes unaffordable.”
But, whatever the reason a homeowner falls behind on the maintenance of their property and their mortgage payments, it can take some time before they actually lose their home. It’s during that time, Mike says, when most homeowners are looking for relief and prefer to sell to real estate investors who can help them exit their distressing situation with some equity—and some dignity—before they’re forced to leave.
Buying and renovating these properties benefits the home sellers, of course, but it also benefits potential homebuyers and the community as a whole—particularly in Chicago’s South Side. On many of these homes, Mike has had to perform a full-scale rehab and bring the properties back to code. Because of the rising popularity of reality TV shows on flipping houses in Chicago has changed homebuyers’ expectations, he’s also made a point to modernize them. So, the homes become safer and more attractive, while still remaining more affordable than houses in other areas of the city. It also raises property values and drives out crime. This attracts blue-collar workers, newly married couples, and first-time buyers looking for opportunities to build their financial future by buying a home. Mike adds that it also brings in young families and single parents who simply want a safe neighborhood for their kids to grow up in—a trait not formerly associated with South Side Chicago, until recently.
How to Make a Difference in Your Community
How and where you invest in real estate has an impact on the lives in the communities where you buy. And, as with Chicago’s South Side, that impact can promote such a positive shift that the neighborhoods once avoided become the very neighborhoods that are the most appealing. That’s why independently owned and operated HomeVestors® franchisees, like Mike Tassone, buy from homeowners in transitioning neighborhoods before they fall further into financial distress or lose their homes altogether. It’s a more ethical way of doing business, and thanks to the other business tools and resources HomeVestors® franchisees have access to, a potentially more profitable way too.
To find out more about how you can lift your bottom line and the lives in communities like South Side Chicago, call HomeVestors to start investing in real estate—ethically—today.
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