Deal snapshot
| Location | Englewood, Chicago, Illinois |
| Property type | 60621 brick two-flat (vacant both sides post-acquisition) |
| Loan type | Hard money bridge → DSCR hold |
| Loan amount | $227,700 total (90% LTC) |
| Close time | 11 business days |
Investor challenge
A sponsor with three prior South Side projects acquired a vacant Englewood two-flat on Honore Street — collapsed rear porch, open scavenger violations, heirs wanted an 11-day close. Banks would not fund until violations cleared. The thesis was yield-on-cost hold, not a quick flip: $138K basis with $2,700/mo stabilized gross could beat anything deployable in Albany Park at the same capital.
Jaken Finance Group’s solution
90% LTC at 12.25% IO with 14-month term and draws tied to porch rebuild sign-off, violation clearance, and unit completion — not cosmetic photos. One subcontractor was replaced mid-project; milestone draws protected the sponsor from upfront payments to unvetted crews.
Outcome
Stabilized gross rent: $2,700/mo ($1,350 per side)
Appraised value at refi: $310,000
DSCR refi: 75% LTV → $232,500 @ 8.65% — substantial equity return while cash-flowing at Englewood yield
Chicago hub: hard money loans Englewood · DSCR loans Chicago
Acquisition
Purchase: $138,000 · Day 11 close
Hard money: 90% LTC · 12.25% IO · 14-month term
Rehab and compliance scope
| Item | Cost |
|---|---|
| Rear porch rebuild + roof section | $28,000 |
| Violation clearance + DOB fees | $14,200 |
| Electrical panel + two kitchens/baths | $31,500 |
| Masonry tuckpointing | $15,300 |
Total rehab: $89,000 · All-in: $227,000
Hold exit (executed)
- Gross rent: $2,700/mo
- Appraisal: $310,000
- DSCR refi: 75% LTV → $232,500 @ 8.65%
- DSCR ratio: ~1.09 at RLTO-modeled expenses
Why hold beat flip on Honore Street
A modeled $335K flip on similar Englewood stock netted only ~$49K after 13-month carry and transfer friction — viable, but the sponsor chose permanent debt to stack another south-side file with the same contractor bench. Takeaway: Englewood rewards operators who vet contractors, price violation clearance upfront, and underwrite both flip and hold exits at LOI.
Violation clearance timeline
| Month | Milestone |
|---|---|
| 1 | Porch demo + structural engineer letter |
| 2–3 | Porch rebuild; first DOB inspection fail (footing detail) |
| 4 | Violation cleared; roof section complete |
| 5–6 | Both units kitchen/bath rough |
| 7 | Units completed; leases signed |
| 8 | Appraisal ordered; DSCR refi |
Six months on violations alone — hard money 14-month term was sized to compliance first, not cosmetic speed.
Draw discipline after sub walk-off
Original porch sub abandoned job at 35% draw. Replacement contractor required new lien waiver chain — Jaken Finance Group held $18,000 until engineer re-inspected footings. Lesson: never release violation-clearance draws without DOB sign-off, even under heir timeline pressure.
Englewood vs Bridgeport on same capital
| Metric | Honore St (this file) | Bridgeport case study |
|---|---|---|
| Acquisition | $138,000 | $268,000 |
| Rehab | $89,000 | $95,000 |
| Gross rent | $2,700/mo | $2,650/mo |
| Appraisal | $310,000 | $385,000 |
| DSCR | ~1.09 | ~1.08 |
| Edge | Yield-on-cost | RLTO single-unit + faster refi |
Both cleared refi — sponsor chose Englewood for lower cash-in per door when stacking third south-side file in same calendar year.
What would have killed this file
- Cosmetic-only scope without violation cure — DOB would block CO
- Front-loaded draws to first sub before inspection — lien and rework risk
- Flip-only underwrite — $335K ARV spread did not justify 13-month carry vs $232.5K permanent debt
Operator lessons
Contractor vetting: Replacement porch sub required Cook County GC license + $2M GL — sponsor kept bench of two subs on south-side files after walk-off. Insurance: Vacant-building policy during violation clearance ran $340/mo — modeled in carry, not surprise. Security: Boarded windows during months 2–4 — scavenger violations draw scrutiny; sponsor documented weekly site photos for DOB.
Rent achievement: $1,350/side required LVP + kitchen refresh only — no luxury finish Englewood tenants will not pay for. Compare South Shore DSCR spoke for six-flat refi math at higher scale on same south-side relationship.
Carry cost through violation phase
Hard money 12.25% IO on ~$205K average outstanding during months 1–6 ran ~$12,600 interest before any rental income — plus $340/mo vacant policy. Total pre-revenue carry ~$14,600 was modeled at LOI; sponsors who omit violation-phase carry overbid at auction-style heir timelines. Both units leased within 12 days of CO — property manager already on sponsor’s south-side bench. Appraisal used three leased 60621 two-flats within 0.4 mi — not Bridgeport sales with higher basis. Refi closed day 34 after appraisal receipt. 60621 block had two other sponsor projects within eight blocks — contractor bench and property manager familiarity reduced lease-up risk vs cold-entry Englewood files. Hard money maturity landed month 11 with three months cushion — violation clearance timeline was the binding constraint, not rehab speed.
Englewood BRRRR Case Study — South Side Hard Money to DSCR: replay checklist
Case studies illustrate one closed file — not a guarantee of future terms. Before you mirror the structure:
| Step | Action |
|---|---|
| Comps | Three solds within 0.5 mi on matching bed/bath and product type |
| Carry | Model 8.99%–13.5% IO bridge and 5.75%–10.5% DSCR exit with investor tax and insurance |
| Entity | LLC vesting, operating agreement, and EIN aligned before appraisal |
| Exit | Written takeout path — DSCR refi, sale, or wholesale — before increasing rehab scope |
Ready to pressure-test your file? Submit scenario · DSCR calculator · (833) 264-7776.
Related
Pre-Qualify for South Side Hard Money · (833) 264-7776