Good Luck Rehabbing In Chicago...:(
Was surfing City of Chicago web site for various licensing requirements,and found this:
http://www.cityofchicago.org/Revenue/License/ResidentialRealEstateDeveloper.html
Basically, anyone doing a substantial rehab of the property that's not their primary residence is required to have a license. Isn't it great?
I do not see a problem with this as the fee is only $125 and is tax deductable.
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I just skimmed the article but it looks like you can just pay the $125 and obtain the license. Is this what you see?
Good Luck!
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Michael,
This is just one of many little inconviences that the City of Chicago uses for revenue enhancement. Otherwise known as the death of a thousand cuts. In itself its not a big problem. There used to be a similar requreement for a business license as a General Contractor before you could pull a building permit.
Now before what follows allow me to start off by saying that I really like Chicago. I've lived and worked here almost 25 years now. It is a beautiful city. And one of the most vibrant and diverse and viable cities in the country.
I've done projects all over town, in good neighborhoods and bad. But the way city government is run stinks.
At the risk of emperor Dailey's minions reading TCI and sending building inspectors in droves over to visit my buildings allow me to respond.
In the old days (i.e. 15-20 years ago) if the garbage in your dumpster overflowed you got a phone call from the inspector from Streets and San. "Hey, the dumpster in back of XXXX address is overflowing. How about gettin it cleaned up?" So you sent the janitor over and he cleaned it up. If you didn't clean it up by the next day you got a citation and had to go to garbage court where the judge would remind you that overflowing dumpsters are feeding grounds for rats and Chicago has plenty of rats already. If you brought a picture of the now-cleaned-up dumpster that was the end of the story and if you didn't you got a fine.
Then the city decided that this was a missed revenue opportunity. So instead of the phone call the Streets and San guy would show up with a ticket, especially if you had an office in the neighborhood so it wasn't too hard to get to you. If your office was in the suburbs you got a pass. Now you have to go to court-- same deal. Except that the city was always saying that the condition had persisted for some days and the fines were more common.
Then the City decided there were still revenue enhancement oportunities in the occasional over-flowing dumpster. So the streets and San guy stopped visiting your office and the ticket showed up in the mail-- city or suburbs. Now the "persistent condition" claim was more true cause it always took a couple of days for the ticket to arrive.
But the City still knew that there were opportunities to increase revenues and cut expenses. So instead of sending sanitation violations to court they instituted an administrative hearing system. Now you never get off without a fine. Whether you clean up the garbage or not they always hand out a fine-- just a few hundred bucks. Never enough that you can afford to appeal to court. But always more than enough to pay for the cost of prosecution.
The thing to remember here is that this was supposed to get the garbage cleaned up. But it doesn't have that effect. 99% of the time you cleaned up the garbage when you got the phone call from the inspector the same day. Now you don't even find out about the problem for a couple of days. The purpose here is not improved sanitation-- it is revenue enhancement.
So the license is the same thing. Having required the license the city will next start handing out fines against the license for a host of petty offenses. And you have to pay the fines or they will not allow you to pull a building permit. Like I said, never enough fines to actually run you out of business. Most guys just tack it onto the rents and call it a cost of doing business.
Instead I got out of the residential business. Now I'm doing projects out of town. Its a wonderful place to live. But unless you are a part of the political class its a very difficult place to be an entrepeneur.
Mark makes an excellent point. Obviously the previous two posters have never done business in the City of Chicago and are not very familiar with the level of politics and bureauracy there. If this was only about $125/year, this would be nothing. But licensing is different from building permits. Licensing carries on certain responsibilities and guidelines, and exposes one to various liabilities and fine potentials from the license-issuing body. Yuck!!!
If you hire a licensed contractor in Chicago to do the work, does that negate the need for the owner of the property to have a license?
It does NOT negate a need for this Residential Real Estate Developer License if you are hiring a General Contractor to rehab your investment property! As long as you're making a living building or rehabbing properties, you need to be licensed. :(
Wow! Not much money, but what a pain in the backside. I wonder what the city of Chicago would do if investors just refused to rehab in the city. The blight could become overwhelming.
Here's a good one for you as well - The City of Chicago charges you a yearly "City Sticker" fee of $75 if you live within city boundries for each car you own. You don't get anything for this other than a nice sticker that must be displayed in your front windshield. Now, I was traveling once when I lived downtown, my car was parked on the street - I forgot to get my city sticker and the grace period (1 month) had passed. Here comes the "revenue opportunity" from hell. The police gave me a ticket, every day, for not having a city sticker until I got back and got one. My total in tickets....$1,000 - all for the same thing, plus an increased fee for being late in getting the sticker. How's that for a revenue opportunity? 8-) I've seen the city tow trucks tow poor Fed Ex drivers making deliveries too, they are ruthless!
Unbelievable! I guess these are the decendants of Al Capone?
It get even better! If you take the "L" train
out to the burbs, and then fall asleep in the car to the airport (no Joke) the ticket for sleeping on the train at Ohare A/P is
$50. !! This was reported on the radio in the last 3weeks! :-o
First of all let's make one thing clear, I have done many deals in Chicago and all have been rehab.
Chicago is a great city and yes it has its pains when it comes to developing, rehabbing and so on.
The difficulties are just perceived to be difficult, the art in doing a deal in Chicago is networking, working within the system and simply paying bonuses to help facilitate things along.
Individuals have difficulty when they do not work within the system.
Why do businesses in Chicago?
Occupied housing units 1061928
92.11%
Vacant housing units 90940
7.89%
Homeowner vacancy rate (percent) 1.7
Rental vacancy rate (percent) 5.7
Forty-four percent of residents own the housing quarters in which they live, while the other 56 percent are renter occupants.
As an investor I have 56% of Chicago's population to place in a home by selling, owner financing to or lease option to.
Why would you not want to do business in such a profitable city?
Well let me give one other reason. Chicago has one of the most vibrant economies of any city in the midwest. As I travel I seem to find cities that work and those that don't . Very few seem to "sorta" work. On that system Chicago is definitely in the "works" column. Real estate is strong and population is increasing. As I said before-- except for the medieval organizational system in city hall where everything is done by who you know its a great town.