With an extensive background in selling and leasing apartment properties, John McGeown started High Fidelity Property Management in 2010. A Chicago native and longtime North Side resident, he utilized his large network of contacts to successfully build the business almost exclusively from referrals – effectively meeting the increased demand from his clients. John’s growing management portfolio now includes more than 1,000 units in over 100 buildings, with a myriad of expertise throughout Chicago’s neighborhoods and surrounding suburbs.
Today, he digs deep into the nuances of the unique Chicago market, the opportunities and risks you need to know about, and what they are doing to thrive in the space.
[00:01] – [04:43] From Navy to Real Estate
- John talks about his real estate journey and eventually developing a passion for property management
- He explains why Chicago’s housing stock is different from anywhere else
[04:44] – [07:58] Getting Into the Chicago Real Estate Market
- There is always a good time to buy in Chicago, but the market is tougher now because of the financing climate
- The higher density and scale, the better
- When looking for an investment, it is important to have a team assembled, to know the neighborhoods, and to have a relationship with banks, general contractors, brokers, etc.
[07:59] – [13:16] Succeeding as a Chicago Real Estate Business
- John on founding his company and how they started incubating properties
- While there is a softening in the market, he believes that Chicago is defying gravity and there are always good deals
- Make sure that you’re buying in an area where the residents will have an easy time either going to work or going to enjoy their life
[13:17] – [17:50] Closing Segment
- John reflects on valuable lessons he learned throughout his career
- Pick your focus and stay in your lane
- Don’t ever quit
- Reach out to John!
- Links Below
- Final Words
Tweetable Quotes
“ Chicago has a very unique housing stock. In the sense that there’s a lot of smaller multifamily.” – John McGeown
“My proposition was, let me rent it for you. I’ll manage it for you. We’ll incubate this single-unit condo and when the timing is right and the market’s there, I can sell it for you.” – John McGeown
“Take all that information as a learning lesson and apply it to your next project. Just never give up.” – John McGeown
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Connect with John through HiFiPM.com or HighFidelityRealty.com. Email him at john@hifipm.com and find him on LinkedIn.
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Want to read the full show notes of the episode? Check it out below:
[00:00:00] John McGeown: Making sure that you have your banking relationship, architect relationship, general contractor, multiple real estate brokers, property managers, you know, things like that. I think having a good team before you start, like, writing offers or buying buildings, like, getting your team assembled and making sure that everybody’s on the same page and everybody knows what you’re looking for and what you want and how you want to go about doing it is very important.
[00:00:37] Sam Wilson: John McGeown is a Chicago native. He’s a military veteran and longtime real estate professional. His values are fairness, transparency, and empathy. John, welcome to the show.
[00:00:47] John McGeown: Thank you for having me.
[00:00:48] Sam Wilson: The pleasure is mine. John, there are three questions I ask every guest who comes to the show: in 90 seconds or less, can you tell me where did you start? Where are you now and how did you get there?
[00:00:56] John McGeown: Sure. I’m a Chicago born native. I went to Lane Tech for high school. I went to UIC for college. I was in the United States Navy for four years, from 1999 to 2003, had a very seasoned career. While I was in, I was an operation specialist, which basically means I was on board on the ship. We did, like, a lot of intelligence, so information gathering and processing and evaluating and a lot of that sort of transposed well into real estate. I started in real estate right when I got on the Navy in 2004. Started an apartment rentals and then slowly but surely as I unpeeled the onion back, I found that, you know, property management, sales and then investing was sort of the path for me. And those all kind of happened a few years apart. And today I own High Fidelity property management as well as High Fidelity Realty and about 12 investment properties.
[00:01:52] Sam Wilson: Wow, that’s a lot of moving pieces. So property management side of things. You guys manage existing assets to other people own, is that…
[00:02:00] John McGeown: Sure. Third party.
[00:02:01] Sam Wilson: Third party management and then also you have your own suite of rental properties. Is there one you prefer over the other?
[00:02:08] John McGeown: Oh, man. That’s a good question. I like property management, whether it’s managing my buildings or managing buildings for other people. There’s definitely a need for it. And the buildings, there’s always stuff to do. The only constant is change. Things are always changing and I like that. It keeps me on my toes.
[00:02:27] Sam Wilson: John, would you say that managing properties in Chicago is different maybe than what you see in the rest of the country? But I’m thinking of when I say that is maybe just the types of properties that you’re managing as far as age, as far as style. It’s a little bit different maybe than what you’d find, say in suburban Nashville. Is that fair?
[00:02:46] John McGeown: That’s a fair statement. Yeah. Most of the buildings we manage are a hundred years old, right, brick in varying conditions. Some are older and need a little more love. Some are older but have been renovated and are in really good shape. But Chicago has a very unique housing stock. In the sense that there’s a lot of smaller multifamily. So we manage anything from 6 unit apartment buildings to 50-unit apartment buildings. And most of the stuff is brick. The weather changes here a lot, whereas other parts of the country, I think a lot of the housing stock is newer. A lot of it’s with Hardie board or frame, and it seems like the weather is maybe a little more cooperative in other places, which makes it a little bit easier to manage.
[00:03:29] Sam Wilson: What are some things that you would recommend investors look for if they’re looking at Chicago as a market to invest in? Like, what are some things you said, man, here’s a few items that I would say you really make sure you got to check off when taking a look at buildings.
[00:03:44] John McGeown: Because of the weather and it being fall right now, and this being kind of my focus, finding properties where the seam is intact, and I’ve said this before, but you know, your roof your parapet walls, the tuckpointing the windows, the basement, you don’t want any water getting into these buildings and the tighter the seam of the building is sealed, the easier of a time you’re going to have to reach your objectives on the inside of the property. So a lot of people buy property and they look at, you know, old kitchens, old bathrooms. Can we redo the floors? But a lot of that stuff is definitely prudent. But before you go and do that, I would say you always want to make sure that the seam of the building is tight because if you don’t have that done, oh, what ends up happening is water will penetrate into the building and it’ll ruin all of the stuff that you had just fixed.
[00:04:32] Sam Wilson: That’s interesting. Yeah. And it sounds like that’s something you’ve learned from hard experience dealing with a hundred-year-old properties on a consistent basis.
[00:04:39] John McGeown: That’s right.
[00:04:40] Sam Wilson: That’s really, really great advice. Thanks for that. Appreciate it. Tell me about the Chicago market as a whole. Is now a good time to be looking for multifamily and or rental properties there in Chicago?
[00:04:52] John McGeown: From my purview, there’s always a good time to buy. There’s always going to be deals out there. It depends on what your objectives are and what kind of flexibility you have. The lending climate, you know, financing climate I think is affecting everyone across the board. That’s making things a little bit tougher. Some things have slowed down with respect to velocity in the marketplace. Some of that has to do with larger economic issues, but really in Chicago, the seasonality of the business sort of kind of puts things, you know, there’s a there’s a lot of activity in the summer and the spring. And then when you get into the fall, winter, things tend to slow down a little bit naturally just because of the weather. But as far as a whole, there are still a lot of good deals if you’re looking for value add properties where you can get in and rehab them. I think that’s a harder target. What I’m seeing a lot more of are buildings that have been improved, you know, anywhere from 10 to, you know, 10 to 5 years, to just a couple years old, and people are trying to sell those buildings to people who don’t want to do a lot of the work, and I see some value there because of construction costs and because of labor shortages and things like that. Some of those deals are a little bit more attractive to us, but the cap rates, you know, and the financing has to make sense as well.
[00:06:09] Sam Wilson: Yeah. Yeah, that makes a heck of a lot of sense. You know, buying buildings that are already renovated, you know, ready to go for the investor. Tell me, you know, what sorts of things outside of that are trading hands right now that you guys are looking at that, you know, where’s the most activity in the market?
[00:06:25] John McGeown: The most activity in the marketplace is in, you know, the more density, the better it seems. I mean, a lot of investors are looking for economy to scale. So, wherever there’s density and scale, those are always going to trade in good markets and in bad. There’s a lot of that going on, and like I said, a lot, you know, anything from a three, four-unit to a 30, 40 unit building in A, B, C, even D neighborhoods seem to be trading pretty with, a lot of regularity in Chicago.
[00:06:55] Sam Wilson: Wow. That’s really cool. I love the Chicago market. Chicago’s probably one of my favorite cities to come to visit. Certainly, I can picture, you know, and I haven’t been up there in a couple of years, but can certainly picture, you know, the type of assets that you guys are buying. And it is unique, I think, market. When someone comes to market, what are some of the first things that they should start doing when they’re starting to select an area to invest in around Chicago?
[00:07:17] John McGeown: I think having the right team assembled is probably the most important thing to me. I deal with a lot of outside investors, people from California or New York or Texas even. And getting to know the neighborhoods is one thing, but making sure that you have your banking relationship, architect relationship general contractor, multiple real estate brokers, property managers, you know, things like that. I think I think having a good team before you start, like writing offers or buying buildings, like getting your team assembled and making sure that everybody’s on the same page and everybody knows what you’re looking for and what you want and how you want to go about doing it is very important.
[00:07:58] Sam Wilson: Tell us, let’s talk about your property management company. At what point in time did you know., hey, I’m onto something, and that there’s a need in the marketplace that I can fill.
[00:08:07] John McGeown: I started the company in 2010, which was right during the recession. And at the time I was working for Jameson Sotheby’s and my objective was to sell property. I wanted to be a real estate broker, so residential, commercial, I felt like that was a good hybrid. But at that time, a lot of people were underwater and, you know, they didn’t want short sell. They didn’t want to give it back to the bank. So my proposition was, let me rent it for you. I’ll manage it for you. We’ll incubate this single-unit condo and when the timing is right and the market’s there, I can sell it for you. So sort of like this one-stop shop idea for absentee landlords in Chicago because at that time a lot of people were going where the money was. You know, like unemployment was very high, so people were losing jobs and then they were getting new jobs in Cleveland or California or Portland, and they couldn’t dispose of their assets in Chicago because they were underwater on us. So they waited it out. That was the initial concept. Then we started, you know, interfacing with owners or investors who were looking to buy larger multifamily that were distressed. And after my first assignment, my first assignment was in the West Loop in 2010. The address was 123 North Sangamon. It was a 45-unit building that was in receivership. My clients bought it, renovated the entire thing. My group, we leased it, we managed it, and then when they exited, that was when I realized that was onto something. That first bigger building assignment, kind of never looked back from there.
[00:09:43] Sam Wilson: Right. Incubate the property. I’ve not heard that phrase before, and I and I kind of like that idea where, you know, you can’t get rid of it, but yeah, you can at least have it cover its debt and if not, make a little money on it and hold it until things are more, you know, more favorable time to sell. Are you guys seeing any price decline currently in assets? I mean, I’m talking to other people in other markets and I’m here and there’s some softening, especially in the multifamily market. So what’s that like in Chicago right now?
[00:10:12] John McGeown: I read a quote and it was, you know, Chicago was defying gravity, and I sort of believe that like the inventory is so slim. It’s sort of keeping pricing high, you know, where interest rates are increasing and costs are going up across the board. Stuff is still, you know, sellers are still out there getting their asking price. Now I will say that over the last month, month and a half, things have slowed down quite a bit and I just haven’t really done a good enough job digging to see if that’s like something local or if that’s with the bigger, you know, stuff from the bigger picture impacting the market.
[00:10:45] Sam Wilson: Right, right. No, that’s very, very interesting. You know, if inventory is slim, it’s one of those, nobody has a crystal ball, obviously, but even with money printing plus inflation, even so, and in an interest rates of course going, you know, sky high, even, so if there’s no inventory, there’s still no inventory.
[00:11:02] John McGeown: Yeah. And I think there’s a lot of people who have set their sites out to Chicago as a viable investment place to be. And you know, there’s a lot of dry power out there and there’s a lot of people who make their living off of acquiring properties. And I do think that buyers are a little more scrupulous and they’re taking into consideration a lot of the stuff we’re talking about. But at the end of the day, stuff’s still trading. I mean, a great example would be 1211 La Salle, like a 60-something-unit condo deconversion. Somebody paid a big number for that and that just recently closed and that was on the market for a very long time. And I think that’s a good indicator of how the Chicago market’s moving.
[00:11:40] Sam Wilson: Right, right. No, I think that’s great. Are there risks or things that investors should be aware of when looking at the Chicago market, either, you know, like you said, seasonally or politically, or things that you maybe apply specifically to you guys maybe that don’t apply in other areas that people should be thinking about? And then if so, how do you mitigate those?
[00:12:02] Sam Wilson: You know, I can’t really speak to stuff like politics or anything like that. But from, just like a pure investment standpoint. There are neighborhoods in Chicago that are still developing, and they’re they’re in development. So knowing what those neighborhoods are and what to look for. I I’ve always said the Chicago market is kind of nuanced. It’s neighborhood by neighborhood, asset type by asset type. So really kind of getting in there and getting on a granular level. And looking at an asset one at a time and then understanding that neighborhood. A good rule of thumb for outside investors looking in Chicago, I never really like to be outside of a 4-block range of a public transportation or the train, figure out how easy it is for people to get a route. So that’d be my one tidbit would be to make sure that you’re buying in an area where your residents will have an easy time either going to work or going to enjoy their life.
[00:13:00] Sam Wilson: That’s a big part of Chicago, like you said, is public transportation. Even when I fly into Chicago, that’s all I do, is use public transportation straight from the airports. It’s just like…
[00:13:09] John McGeown: Yeah.
[00:13:10] Sam Wilson: Otherwise and without that, you go, you know, that becomes a serious consideration. Okay. No, that’s absolutely fantastic. Tell me about the veteran interned broker journey for you. I think that’s probably a fun part of your story and I’d love to hear more of that.
[00:13:24] John McGeown: Sure I got into real estate sort of by accident. Like when I left the Navy, I wasn’t exactly sure what I wanted to do. I had a lot of different ideas. A friend of mine, his father was working at a company called Chicago Apartment Finders, and I started as a listing agent. I didn’t take out renters. I called landlords and nurtured relationships with owners, and we rented their stuff now. That was where we earned our fee from. And so, I got to learn the language of the landlord at an early age, at an early time in my career. And so, with a pretty good, what I felt was a pretty good understanding of what makes an investor tick and what’s going to make them happy or upset them, or what’s a good outcome or a bad outcome. I started setting my sites on more multifamily and you know, I also had a big network of people that I knew. And Chicago is a city where sometimes it’s not all about what, you know, it’s about who you know. And so I wanted to leverage my bigger network of property owners and sell buildings to them. And so I went to a company called Jameson Sotheby’s, where I was, again, kind of a hybrid commercial agent, but also a residential agent. And frankly speaking, the property management company ended up fueling a lot of that sales business while I was at Jameson. So my journey kinda as a broker runs in tandem with my journey as a property management company owner.
[00:14:46] Sam Wilson: When you rewind and think about the last 20, or, I guess, 12 -ish, maybe closer to 20 ’cause you got out in 2003 out of the…
[00:14:54] John McGeown: Yeah.
[00:14:54] Sam Wilson: Yeah. So So pushing 20 years here, if somebody wanted to follow in your footsteps, is there one piece of advice you would give them? You said, Hey, here’s something I did really well that I feel like you should emulate.
[00:15:05] Sam Wilson: You know, never give up. Once you have a goal in mind, just don’t stop until you hit it. I think a lot of people think it’s hard. Maybe they get burned on one deal and they don’t fulfill their objectives. I would say take all that information as a learning lesson and apply it to your next project and just never give up. Don’t ever quit.
[00:15:27] Sam Wilson: I love that. I love that. And conversely, is there something that you feel like a mistake you’ve made or a lesson learned that you could help other people avoid repeating?
[00:15:39] John McGeown: Sure. It took me a long time to kind of refine who I am and why I’m different and why people would want to work with me. And I think part of that process was trying on different real estate personalities, you know, like, am I John the broker? Am I John the investment manager? Am I John the property manager? But like, squeeze it all to the middle and pick your focus, stay in that lane, and don’t leave until you’ve succeeded.
[00:16:06] Sam Wilson: I love that. I love that. That’s really, really good. Yeah. What’d you say? It was John, the broker. John, you mentioned like four different hats.
[00:16:12] John McGeown: Exactly. Yeah.
[00:16:14] Sam Wilson: Right, find your focus and stick with it. I think that that’s absolutely seasoned advice. John, this has been fascinating. Thanks for taking the time to break down the Chicago markets, how you guys are finding opportunity, kind of the nuance of investing in such a unique housing stock. That’s something that, you know, even here in Memphis, I mean, yeah, we’re an older city, but it’s just, it’s not quite the same as to what it is that you guys or the same product type that you guys are dealing with up there. So I can only imagine that having someone such as yourself on the team would be invaluable. If our listeners want to get in touch with you or learn more about you, what is the best way to do that?
[00:16:52] John McGeown: Well, we just launched a brand new website that you can reach us there at http://www.hifipl.Com. That’s H I F I P L.com or High Fidelity Realty. Those both work for URLs. I’m on LinkedIn. I’m on Facebook. My personal email address is john, J O H N, @hifipl.com. That’s H I F I P L.com. Feel free to get in touch with me there anytime.
[00:17:17] Sam Wilson: Awesome. John, thank you so much. I appreciate your time today. Have a great rest of your afternoon.
[00:17:23] John McGeown: Will do, thank you.
