A Dublin agent is offering Irish investors the services of a Chicago management company, writes ROSE DOYLE
PHILLIP HEGARTY of Castleroc Estates has been selling property in Chicago for four years now, long enough to know how the market works in the windy city and to discover how badly its property management companies were treating his clients/investors.
Not one to avoid problems, he investigated and found overcharging endemic, on several levels.
“A huge part of successful investment has to do with managing that investment,” he says, “so we decided there had to be a better way of doing things for our Chicago clients.”
Castleroc says it has come up with that better way. Its clients – past, present and yet to come – can now choose to have unit(s) looked after by Chicago property management company Touchstone at greatly reduced rates, safe in the knowledge that Castleroc Estates is on hand as a buffer between them and Touchstone.
The scheme has advantages for all involved: Touchstone (a small company) has a deal which assures it large volumes of business; property owners/investors have a deal which insures their investment is efficiently and less expensively looked after; and Castleroc is enlarging its client base and ensuring client loyalty.
“If we look after clients now they’ll remember us in the good times to come,” says Hegarty, a pragmatist.
Phillip Hegarty paid his dues in an apprenticeship that included 10 years in corporate finance with RBS bank (“I loved it!”) before leaving to set up Castleroc Estates, with a silent partner, in 2005. “Things were good then,” he says, “and we saw a market niche: Chicago is an affordable city and wasn’t being sold over here. I’d been to the US, done the background work. We set up and focused on high-end properties in the city centre only.”
Castleroc has sold 12 developments in Chicago since then, including ‘2520’ Lincoln Park, where apartments cost between $1 million and $2.7 million (€677,000–€1.8m), and ‘The Catalyst’ on the west side where prices ranged between $250,000 and $600,000 (€169,445–€406,702).
“Then, about 18 months ago, we began to hear of clients having problems with management companies,” Hegarty explains. “When times were good this wasn’t something people paid much attention to but now . . . well, some people were being charged vast amounts.”
On average, he says, a buyer/owner was being charged 10 per cent of the annual rent to manage an apartment. When a tenant moved out, the management company charged a turnabout charge of $1,250 (€847) for cleaning. When existing tenants’ leases came up for renewal they were charged half a month’s rent just to re-sign and stay on.
“We keep in touch with our clients, and they were telling us this,” Hegarty says. “We’re based in Ireland and it’s not our job but our clients are our business and they’ll remember us in the good times, so . . .”
Hegarty interviewed 10 Chicago management companies before deciding on Touchstone. “They’re small, about six people, but we give them all our business and they give us a reduced rate: 8 per cent as opposed to 10 per cent of the rent, no re-signing fee, and a turnaround/cleaning charge of $100 (€67.77).
“They will rent apartments in a guaranteed 14 days and if a client wants to sell they’ll do that too. If there are any issues, Touchstone comes to us first and we deal with it. We’ve got duplicates of all Touchstone transactions in our Harcourt Street offices so clients can come in and go through them at any time.”
Castleroc charges €350 per year for the service. “We could charge €700 but don’t. Times are hard for everyone. If one in 10 of those clients buy through us again, it’s worth it!”
Hegarty says there “have to be at least 2,000 Irish people who own apartments in Chicago. We’ll undertake to look after management for them too, if they want us to.”
www.castlerocestates.ie
tel 01-4789439
