Trending: International Investors Buying Up Chicago
Chicago-based Fulton Grace Realty, led by T.J. Rubin, a 33-year-old real estate wunderkind and internet marketing trailblazer, is at the top of a smoking trend: international house hunters.
Fulton Grace Realty didn’t have growing pains. It exploded from a handful of properties under management four years ago to a portfolio of nearly 500 today. Now they’ve crossed international waters. Founder T.J. Rubin is fielding calls and closing deals with clients from Brazil, Australia and Hong Kong (and a few sneaking in from California), yield chasers who believe Chicago is (comparatively) a sweeter deal. Consider this: A 600-square-foot apartment in Hong Kong will set you back a cool million. Throw in a killer exchange rate and an enticingly low entry fee and you’ve created an attractive target. And they want Fulton Grace to work the deal.
We spoke with Rubin about starting the business, this influx of foreign capital and his international playbook.
FRONTDOOR: Give us a little background on how Fulton Grace Realty grew so fast over the last four years.
RUBIN: I was an attorney in downtown Chicago for three years. And while I was an attorney I purchased a couple of apartment buildings. I thoroughly enjoyed being a landlord, so I decided to go full-time into real estate and started Fulton Grace Realty in early 2009, late 2008.
FRONTDOOR: That was a precarious time, the peak of the crisis.
RUBIN: It was the worst of times for sales. But when we started, it wasn’t necessarily the worst of times for rentals. I didn’t know much about much. I knew I could rent my own properties. There were obviously all these people moving to Chicago, whether they were there to rent or to buy. Who would have thought you could go start a business in the worst of times?
FRONTDOOR: These properties were under water and you started a company to take them on as management?
RUBIN: Yes. We’d find a tenant for those units. [For example], a guy named John bought a beautiful condo in 2007. In 2009 he got a job in Indiana. What’s he gonna do with his condo? He can’t sell it for what he bought it for. The timing for what we tried to do couldn’t have been much better because there was sort of this unknown demand for property management services, for condos, for small apartment buildings. The reason I like this model is because having units under management, such as these single-unit condos, it feeds leasing, it feeds sales and it’s a steady stream of income.
FRONTDOOR: And that income has broadened to include foreign investors. Walk us through this influx of international buyers.
RUBIN: When the U.S. interest rates started to become very low and the sales market picked up, it started to gain worldwide attention from places like Singapore, Europe and South America, and they started looking at U.S. markets. Chicago is a very popular city. For a lot of folks, like in Singapore, the barrier of entry [in real estate] is like a million dollars. Most of these folks look for property managers before they look for real estate agents because they want to make sure that if they’re going to buy a property that it’s going to be well taken care of and it makes sense.
FRONTDOOR: What’s the price range on these homes?
RUBIN: I would say $100,000 to $500,000, with probably around $200,000 and $300,000 as the average purchase. What this buys is, usually, a condo.
FRONTDOOR: What areas are they buying in Chicago? Are they looking in the Loop? Wicker Park?
RUBIN: The bulk of them are really looking downtown or in Lincoln Park, Lakeview, River North, Gold Coast. Chicago is a very neighborhood-y city. It never fails. They say, "What neighborhoods do you think are good?" And I’ll give them pros and cons about certain neighborhoods and my opinion on appreciation and things like that.
FRONTDOOR: What countries are these clients coming from?
RUBIN: Literally all over the world. We just did a closing with folks from Singapore. We have another closing this month with folks from mainland China. South Africa is a new client we’ll start working with. In Brazil, I have clients that purchased a condo and we rented it out and it went so well they told other folks about it. Europe definitely — you know, Ireland, London. It’s pretty random because I don’t do ads specific to certain locations. Right now, we’ve been focusing on really improving our presence in our advertising, sort of local advertising.
FRONTDOOR: What do you think accounts for this interest in Chicago?
RUBIN: It’s two things. One: People just really like Chicago. The second thing is people really want to invest in real estate but it doesn’t make sense for them to do it locally because of the wild prices. There are people that tell me there’s no way they could get a property like this in their market. There’s no way they could get this type of rent.
FRONTDOOR: Let’s say you’re one of the early adopters. You’ve got position. You have that kind of footprint this early. How do you intend to parlay that?
RUBIN: One of the best ways to capitalize, I think, is to erect Internet marketing. I know what’s worked here; we already come up first in most ads. We’ve got a very good marketing campaign. The best way to start, in my opinion, is to have ads in all of the cities where we’ve helped people already. Because if someone from Brazil contacts us, or [from] Sao Paulo specifically, I can say, "Look, we just helped another Sao Paulo resident purchase a unit right in Lincoln Park."
FRONTDOOR: You sound fairly calm for a man about to launch this huge campaign and expand your brand.
RUBIN: It’s an opportunity that can’t be missed. It’s just the same as single-unit condo management. No one knew what the heck managing a single-unit condo was. And all of a sudden it started to catch on. And we were sort of first in the market and that’s why we got a larger portfolio quickly. Same with the foreign investors buying property in Chicago. I wake up every day and I can’t tell you how happy I am I’m not taking the train downtown to work behind the computer as a lawyer.