The city`s affordable housing program, called New Homes for Chicago, was years in the creation.
It was finally authorized late last year, and had a budget of $3 million this year for construction of a maximum of 200 new homes in rundown areas. Some models are up, but no one has moved into a house yet.
David Dubin`s affordable housing program started late last year, too, when he ran a classified ad in a weekly newspaper promising a new 3-bedroom home with 1 1/2 baths and full basement for $99,000.
His first buyer moved into a new two-story home in the south end of Ukrainian Village in late July. The actual price was about $113,000, but that included a few extras like a hardwood floors, a fireplace, a deck and a cathedral ceiling on the second floor.
The buyer even received below-market financing because the home is in one of the Illinois Housing Development Authority`s target areas for home-buying assistance.
The price was a little higher than the city program`s prices, which are mostly around $85,000-but that`s after a $20,000 city subsidy. Dubin`s not subsidizing anyone.
In fact, he won`t even haggle over his prices. ”I`m not doing this for my health,” he said.
Ah, the wonders of private enterprise. The city may have money and clout, but the 32-year-old Dubin has the brashness of youth. (”Aggressive but accommodating” is how one of his Ukrainian Village buyers describes him.)
”Something like this is a piece of cake. It`s a no-brainer,” he said, using a pet phrase. ”There`s nothing special about this house. I don`t know why other people haven`t been doing it.”
Certainly very few have, until Dubin-and the city program-came along. It`s hard to find a newly built single-family detached home anywhere in the city for much less than $200,000. In Wicker Park, a few blocks from where Dubin is building, even townhomes are priced in the high $200,000s.
Dubin decided to try it because he got scared by the slump in the market for expensive homes in the Lincoln Park and De Paul areas, where he had been building in the late 1980s.
”A year and a half ago the market kind of went to hell,” he said. ”I got out in time. I did okay.”
While continuing to operate a rehab and design/build custom home business, he decided to look for cheap lots on which he could offer to build an build an inexpensive house for anyone interested.
He had previously bought a six-flat-”total garbage inside,” he described it-for $75,000 in the southern end of Ukrainian Village, the Near Northwest Side area bounded roughly by Damen, Western and Grand Avenues and Augusta Boulevard.
Some areas of Ukrainian Village, particularly north of Chicago Avenue, consist of well-maintained homes surrounding venerable Orthodox churches, but in the southern end near Grand Avenue, a number of buildings look like the gang graffiti is the only thing holding them up. Up to now, the gentrification transforming adjacent Wicker Park has skirted the area.
”It`s a little funky,” Dubin said. ”You can see the graffiti. It`s still got a lot to come up, and we`re trying to change that a little.”
Dubin was able to pick three lots near the six-flat, including one from the city for $10,000 and another-the one on which he built the house that`s been sold-for the same price in a private deal.
Part of the reason he bought those lots was to protect his investment in the six-flat. ”But I also get a kick out of seeing an area and building it up,” he said. ”The whole thing is creating value.”
Value is the key sales pitch for his homes there, which the neighborhood makes something of a hard sell. ”That`s why the prices are low. It`s easy to sell the house, it`s harder to sell the area.”
Jerre Shank, Dubin`s initial Ukrainian Village buyer, said he was familiar with the general area because he had been living a few blocks north in Wicker Park for four years.
”I saw things changing a lot there,” said Shank, 35, a systems analyst working for the city. ”Going further south, it`s not quite as good. There are gangs, but they pretty much harass each other and leave civilians alone.”
He said might have been able to get an equivalent home for the money in a far-out suburb, where land is still relatively cheap, but as a city worker he is required to live in Chicago.
”I`d rather not see the gang graffiti, but what can you do? It`s an investment in the neighborhood, that it`s going to get better,” Shank said.
Shank found Dubin by reading his classified ad in a weekly, as did Hank Ottery, who is having a home built on a lot across the alley from Shank.
Ottery, 52, who works in public relations, said he could see the area wasn`t well-maintained, but felt that could change. ”With a home finished across the alley and another (Dubin) lot four doors away, I didn`t feel like a pioneer,” he said.
One key to Dubin`s low prices is cheap land, but he also saves by acting as his own designer and land broker-he is a sales agent for Koenig & Strey. Perhaps more important, he keeps a very tight rein on construction costs, including labor.
”You couldn`t build this stuff with union labor,” he said. ”I don`t know anybody building on a small scale who could afford to pay union wages.” The unions, however, have never bothered him, and he has no trouble getting people to work for him, he added. ”They`re still making money, and they know they`re going to get paid.”
In addition, he said, he`s streamlined the building process. ”It`s just a basic box, and I`ve got everything down to a science.
”My secretary just mails out the plans to the subcontractors. I call up my lender and say, `I need a loan,` and they say, `Fine, send me the paperwork.` My bankers know I`ll pay them back.”
With his stripped-down system, Dubin figures he can make $10,000 to $15,000 per house for about a week of his own work once he picks up more land and expands his operation. ”It`s a no-brainer,” he said. ”I won`t have to come out at all except at closing. I rely on my subs. It`s a basic boom-boom home.”
At the same time his company, Dubin & Associates, does rehab work and continues custom home building from the De Paul area to Highland Park. Dubin said he hopes to build a total of eight small houses and four larger homes this year, in addition to a couple of dozen rehab jobs.
In his custom home operation, he will design and build the house for the cost of construction plus a flat fee-$20,000 is typical. In about half the deals he also locates the lot, he said.
His major ongoing project is a group of 12 townhomes planned for two corner lots at Wood and Julian Streets in Wicker Park, with prices starting at $124,500-considerably below some other townhomes in the area. He has the land and plans to start construction next spring.
He is currently working out of his home in Deerfield with a secretary as his only full-time employee, but is planning to open an office, probably in Chicago, and hire a construction manager.
”I`m getting bogged down in details,” he said. ”I want to be free to sell, be creative, pick up more land.” He is on the prowl for investors for land purchases so he can step up his building pace.
Dubin, who graduated from Northern Illinois University in accounting in 1981, was working for a Loop accounting firm when he embarked on his first construction venture by rehabbing a Wrigleyville two-flat he bought as a residence in 1984. He gradually got bored with accounting, and began to work more and more as a general contractor until he dropped his former profession for good in 1987.
His penchant for cost-efficiency may come from the accounting background, but his interest in fixing things up, whether buildings or neighborhoods, may go back farther than that.
His father owned an auto body shop on the Northwest Side, and when he was in high school in Skokie he played the trombone in bands for weddings and made extra money buying old instruments to refurbish and sell.
”I get almost as much pleasure out of this than building expensive homes.” But then his accountant side chimes in: ”If I can make $15,000 a pop and build one a month and do the other stuff, what`s wrong with that?
Nothing.”
A no-brainer, one might say.
