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Jon Morgan and David Goss
Interra Realty managing principals Jon Morgan and David Goss told us on Friday that distressed deals (short sales, note sales, foreclosures) are dominating Chicago multifamily (other than CBD megadeals). They're powered by private equity funds taking on a servicer-esque role. Interra is marketing a multimillion-dollar portfolio for a multibillion-dollar Texas fund that acquired the notes from a bank after the previous borrowers walked away from their mortgages. In these kinds of deals, Jon and David say, the funds are paying a steep discount on the dollar and flipping the properties.
7706 South Coles in the South Shore
They tell us 80% of Chicago's distressed multifamily sales are on the South and West sides (though the duo is wrapping a Lakeview deal this Friday). They just closed two deals in South Shore, each to a different subsidiary of the same parent company. 7706 South Coles in the South Shore was actually a barter with the new owner, a private equity fund that'll provide services to the seller. The 45-unit vacant property will get a gut rehab, preserving the exterior and will actually lose a few units to expanded common space. Studios will start at $525/month and four-bedroom units will be $975. Jon and David's other deal is the 24-unit 7901 South Paxton for $555k, which MB Financial sold after foreclosing.