J.I.A. Enterprises
Inc. is an owner
and manager of
multi-unit properties.
Real Estate Operations
J.I.A. Enterprises has taken an aggressive stance in the real
estate market in south Chicago. We currently own or have under
contract five multi-unit buildings, which upon consummation will
give us about 100 units of rental property in the market. At the
end of 2006, we anticipate a total of 200 units of rental property
in our real estate portfolio. The real estate market in South
Chicago has under-gone a substantial
metamorphosis in the past 8 years with historically high rates of:
re-development; condominium conversions; equity appreciation and
rehabilitation projects.
7661 South Coles,
Chicago, Illinois 60649
An 11-Unit Apartment
Building.
Our real estate
operating plan and philosophy is two-fold: 1) To market properties
to lower middle-class and upper lower class renters that are:
(a) well maintained; (b) well managed and (c) that make an impact
on the attitudes of consumers of rental units in the communities
in which we operate. Simply put our buildings will be as “icons”
in each community for being clean, well-manicured and secure
living facilities for our tenant-guests; 2) To acquire average or
above average properties at or below market rate that we
will work to make great properties thereby allowing us to achieve
immediate equity even in highly leveraged transactions. We will
achieve this aspect of our bi-focal plan by improving the
following aspects of any property we purchase: (a) curb appeal
through upgrading external physical esthetics; (b) providing
residents a secure living environment through tighter building
security; and (c) implementing necessary internal unit
upgrades; in the first three to six months, that will deliver a
better living environment for the tenants of the building. The
initial improvements in the standard of the building will pave the
way for increasing the income of the property through appreciation
of the cost of rental units over time.
7661 South Coles,
Chicago, Illinois 60649
An 11-Unit Apartment
Building.
“7661 South Coles is located 2 blocks from Lake Michigan in a
prime area of south Chicago real estate market”.
Gentrification and
the re-birth of the real estate
Market in the South
side of Chicago
The driving force in the
revitalization of the real estate market in South Chicago has been
two fold. The initial primer was the economic policies of the Bill
Clintons’ administration which led to the revitalization of many
inner-city neighborhoods, including Chicago’s, that had been
abandoned and had fallen on very hard times, through the use of
low-interest rehabilitation loans funneled through organizations
such as ($500 million HUD-endowed lending facility of)
Chicago’s Community Investment Corporation. The accelerant
in the process, however, was supplied by the economic phenomenon
of “gentrification” which saw the gap in property values and rents
combined with location, access to downtown and the social hub,
create a ground swell of opportunities for developers, landlords,
the banking community and the city of Chicago. The resulting
acceleration of activity in the market fueled by low-interest
capital created a real estate appreciation phenomenon that is
continuing to drive activity in the market, earning south Chicago
the title of one of, if not the hottest real estate market in
Chicago-land area.
An Illustration of
Revitalizing a Property is our purchase of 5917 S. Emerald ( See
Below)
5917-19 S. Emerald,
Chicago, Illinois 60621
A 13-Unit Apartment
Building
“Although this property
is fully occupied, J.I.A. Enterprises will make fairly substantial
external and internal renovations of this property including;
resurfacing the brick façade, replacing windows, and landscaping
in order to achieve the curb appeal we desire in our buildings”
What is
Gentrification?
“The patterns of capital
flows have a visible effect on working class communities in the
United States. Some communities see de-industrialization,
abandoned stores, boarded-up dwellings, scarce jobs. Such are
signs of disinvestment. Capital has moved elsewhere.
In other times and
places an inflow of investment fuels gentrification. Upscale
condos are erected, houses are rehabbed. Candle-lit restaurants
and stores catering to people with higher incomes displace bodegas
and used appliance stores. Rents rise as landlords realize they
can attract professionals and business people as tenants. An area
of "valuable city real estate" is being cleansed of its working
class residents.
7237 S. Bennett,
Chicago, Illinois 60649
A 25-Unit Apartment
Building
Both gentrification and
disinvestments are processes made up of the activities of certain
kinds of social agents or institutions. Landlords, developers, and
banks all play key roles. To understand how both decay and
gentrification of urban neighborhoods happen, we need to look at
the dynamics of capital flows into and out of the built
environment.
Buildings represent a
major investment. For this reason, they are not replaced for many
years after they are built. An older area in an American city may
have been converted from open agricultural land to urban uses in
the 19th century or early 20th century. As the lots in a newly
subdivided area get built upon, builders and sub-dividers move
outward into more outlying areas in search of new building sites.
A building is like a
piece of machinery or a motor vehicle — it depreciates in value
over time. Parts wear out; the roof may need to be replaced after
years of beating back the rain. The building style may go out of
fashion. Technological changes such as new standards in electrical
or plumbing systems may erode the value of a building.
Of course, the
electrical or plumbing systems in a house, or the lighting system
in a commercial building, may be upgraded. This is new investment;
a neighborhood where this is continuous is not in decline.
Some neighborhoods
continue to retain their ability to attract professional and
business people to live there. Owners of rental properties in such
areas will have an incentive to upgrade their buildings because
they can command rents high enough to generate a good return on
that investment. Other areas may fall out of favor.
7400 S. Phillips,
Chicago, Illinois 60649
A 15-Unit Apartment
Building
Capitalism generates a
division into classes. At the top of the social pyramid is the
tiny class that owns the bulk of economic wealth. Filling their
need for control over labor is another class — the
techno-managerial "middle class" who manages, plan, advise. Their
class position is based on monopolization of skills, education and
connections rather than ownership of capital. Below them are
ranged the mass of workers who are forced to work under the
control of this sort of hierarchy — the working class. This class
hierarchy in the economy generates great inequality in wealth and
income.
The housing market tends
to sort the population by income into different areas. Racism may
add another type of sorting. If lower income residents are
increasingly populating an area, landlords have an incentive to
not maintain their properties. If they were to invest in upgrades,
they'd need to charge a higher rent to make this a profitable
investment. People with higher incomes who could pay the higher
rents may not be willing to live in that neighborhood. So
landlords simply "milk" the decaying buildings of their rent. By
putting off repairs, they can save money to buy other buildings
elsewhere.
The failure to
continually upgrade buildings and replace the worn-out building
stock with new buildings amounts to a process of disinvestments —
shrinkage of capital — in an area.
Houses serve a dual
function to live-in owners. They are a source of shelter, a
respite for private life, a realm of personal control. But in the
context of a capitalist economy, house ownership is also a form of
investment since it represents equity with sizable potential
revenue from its sale. Owning a home is not inherently a
speculative investment but the market governance of urban real
estate gives it this character. If an area is declining a
homeowner may decide that it wouldn't pay to put money into
rehabbing their house. They may choose to sell and buy a house in
a newer neighborhood to protect their investment. As an area
becomes more of a low-rent area, some houses may be cut up into
separate rooms or apartments to increase the rental revenue.
In the early 20th
century deteriorated "fringe" areas tended to develop around
downtowns of major cities in the USA by the sort of process
described above. This process of inner-city disinvestments was
particularly prolonged in the USA in the decades after World War
II. Rising real wages, Federal Housing Administration loan
policies, the homeowner interest deduction on income taxes,
corporate decisions to relocate plants to outlying areas, massive
freeway construction, white flight — all these things contributed
to the outflow of investment into sub urbanization and lack of
investment in older city areas.
As the urban area grows,
the terrain now occupied by deteriorated buildings and a
low-income population may be close to areas of concentrated
economic activity such as a downtown. Closeness to downtown jobs,
easy transit access, and interesting older architecture may give
the area the potential to attract higher income residents or more
well endowed businesses.
A gap thus emerges
between the rents that an area of deteriorated buildings and
low-income residents can generate and the potential rents that the
area could generate if it were completely rebuilt or renovated to
its "highest and best use" (in real estate jargon). Neil Smith
coined the phrase "rent gap" to refer to this phenomenon. When
this rent gap becomes large enough, the area may be ripe for
gentrification, that is, for a new round of investment.
Speculators may begin to buy properties in anticipation of
increased market values of properties once such a process gets
underway.
7700 S. Kingston,
Chicago, Illinois 60649
A 32-Unit Apartment
Building
To make investment in
new construction and rehab profitable, developers must be able to
attract residents who can pay higher rents such as professionals
and managers (the urban "gentry"). Once this process gets
underway, landlords will have an incentive to evict low-income
residents in favor of more affluent tenants who can afford higher
rent. Deferred maintenance by landlords during this phase may be
motivated by a desire to drive out the lower income tenants. Banks
and other financial institutions turn on the faucet for mortgage
and construction loans. Construction of new upscale condos and
office buildings raise real estate values as other landowners
realize that more upscale uses of the land are now possible”.
J.I.A Enterprises Inc is
proud to be involved in the real estate market in South Chicago as
both a forward looking business opportunity for our company, as
well as an opportunity to provide decent well-managed residences
to low income inhabitants of the area. Through equity appreciation
unlike any in recent times, as well as revenues from rental
income, J.I.A Enterprises’ real estate portfolio will become a
significant propellant for growth initiatives both in additional
real estate acquisitions as well as in other non-related business
ventures of the company. At the same time, J.I.A Enterprises Inc
continues through real estate acquisitions in south Chicago to
position itself as an increasingly vital owner and manager of real
estate in one of the most dynamic real estate sectors in Chicago.
For additional information about real estate opportunities with
J.I.A Enterprises Inc, call 847-759-9152 or send an E-mail
to
inquiries@jiaenterprisesinc.com.
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