Friday, November 5, 2010

Daring to spend during the downturn

This person in a column from the Tribune's Melissa Harris talks about a person who owns real estate in Chatham:
Al Goldstein, 29, has built a successful career by predicting who will pay their bills on time.

At age 25, he became a multimillionaire when he sold CashNetUSA, a Web site he co-founded that provides short-term, high-interest-rate loans to people who earn $35,000 a year on average. The industry is known as payday lending and it has faced tighter regulation in some states and is banned in others.

Goldstein has since entered an equally unglamorous field: affordable housing. Pangea Real Estate, which Goldstein launched last year to take advantage of the surge in renters following the mortgage crisis, has bought (and now manages) nearly 3,000 rental units in Chicago.

"We're focused on neighborhoods that are struggling now, but have the potential to become stable over time," such as South Shore, Chatham and Austin, he said.

Tapping a $56 million private equity fund he raised, Goldstein buys distressed properties with cash, rehabs them, rents them, then secures a mortgage, which frees capital that is returned to investors. Goldstein was in Hong Kong on Wednesday raising money for a second fund.

Goldstein has received a warm reception for improving deteriorating buildings. The challenge, he acknowledged, will be to find and retain tenants who'll take care of their apartments — and enough of them to cover the mortgage.

Much of his team, including his partners (his brother, Alex, and Steven Joung), worked with him at CashNet, where they gained experience mining data that would help them determine which consumers are most likely to pay on time.

"We're going into this with open eyes," Goldstein said. "Our last business was far more intense. When I sold it, we had 550 employees; 425 of them worked in various call center capacities."
 Pay attention to what I placed in bold. Surely many of you think that Chatham is already stable, yes?

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