UncategorizedClient Success Story: Bringing A Mixed-Use Property Up To Code


Mixed-use properties can sometimes pose unexpected issues. The reason: when mixed-used properties are assessed, it is done from the exterior of the building. When assessors make assumptions, they can lead to incorrect coding based on what the mixed-use property includes.

In this case, our client was buying a mixed-use property with two retail spaces on the first floor and three residential units on the second floor. However, the city of Chicago had only zoned the property for two residential units. As a result, it was not in compliance with the city of Chicago code. Our client was willing to make the renovations to change the property, but in order to do so, they would have to take two of the units and rehab them into a single unit to bring it up to code.


The issue this posed was that in order to make the changes, they required a 203 K rehab loan, in which the lender provides enough money to make the purchase and then escrows the rehab costs. However, the work has to be completed in a certain amount of time. This transaction occurred during the pandemic, and the rules stipulated landlords couldn’t evict tenants, and these units were occupied by tenants.

As a result, work couldn’t begin until the tenants were removed. With so many moving parts, the risk of possible delays made it likely our client would default on their mortgage because there was no way they could complete the work with tenants living there. Also, the entire 203 K loan process can take a long time. Inspectors have to assess the property and continue to do so to ensure everything is proceeding and the work is all up to code.


We had to find a way to keep everything moving forward while reducing the risk of our clients defaulting on their payments. The tenants, of course, were a major challenge due to pandemic initiatives, so we had to find a way to keep the tenants happy, yet willing to leave on their own. We succeeded in having the tenants move out, which made it easier to stay within the timeframes for the loan. Once the sale was closed, we were ready to get in and start the work.

But the process came to a crawl with the lender. It took them another three months before they completed the underwriting, so the closing was delayed. Meanwhile, the seller had lost their revenue because their tenants no longer lived there. In order to keep the process moving forward, our client had to cover the seller’s costs for three months while their lender finished the underwriting. This required us to stay on top of the lender to finish the process to reduce the costs our client was incurring due to their lender’s slow progress. We hadn’t even closed on the property, and the client was incurring costs.


After some fits and starts, we ensured our client received the loan and terms they needed to purchase their ideal investment, and that the rehab was compliant with building code requirements.

7538 St. Louis Ave Skokie IL 60076


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