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“King of Flippers” in the Midwest!

August 23, 2018

Mark Filler, a longtime mortgage and finance professional, wants to rehab and flip as many as 300 houses a year in the tri-state area within a few hours' drive of downtown Chicago.

Crain's Chicago Business - August 23, 2018 06:00 AM

After more than 20 years in the mortgage and real estate finance business, Mark Filler has crossed over into real estate itself, where he's announced an ambitious goal: to become the biggest flipper in the Midwest.

Apex National Realty, a Hoffman Estates firm he launched with partner Chris Shaxted in late 2017, is buying rehab-worthy properties in a tri-state area within a few hours' drive of downtown Chicago at the rate of 10 a month, according to Filler, who's the CEO.

"The goal is to get to 30 a month," Filler said. "I think we can buy, rehab and sell 300 properties a year and be the biggest flipper in Illinois, Wisconsin and Indiana."

From his most recent gig, four years as CEO of Jordan Capital Finance, a Chicago-based lender to residential rehabbers that was sold to the Blackstone Group in 2017, Filler knows that most flippers are small operators doing fewer flips in a year than he's planning to do every two weeks.

"You can make that kind of scale work," said Frank Montro, a Keller Williams agent in Orland Park who has worked extensively with rehabbers and has consulted for Filler, "but you'd better have that Mel Gibson Braveheart fierce energy, like your hair's on fire."

Filler says Apex will rely on economies of scale: buying flooring, cabinets and other materials in bulk, for example, and lining up contractors who can move from kitchen install to kitchen install as if they're building new subdivision houses all down the block.

It's a model that works for another, larger firm where Filler is also CEO: Express Homebuyers based in Springfield, Virginia. Since 2003, Express has flipped about 2,300 homes in 10 eastern states, according to Filler, who became Express's CEO about six months ago. That's a pace of about 153 a year, or roughly half what he hopes to do with his Midwest company.

Apex will also rely on buying rehab-worthy properties at low acquisition prices, a prospect that gets harder all the time as the supply of foreclosures and other distressed properties dwindles a decade after the foreclosure crisis began, and as the competition among flippers grows more heated. Filler says Apex will rely on "pre-market" buys, using data and a well-connected network to find properties that need updating and other work but aren't yet openly for sale. They may be homes owned by aging couples or the heirs of deceased owners, or recently divorced couples—people who either can't or don't want to spend the money needed to rehab and refresh the home before putting it on the market.

In February, Marsha Schwartz, a Coldwell Banker agent, listed a home on Lindenwood Lane in Northbrook for the estate of owners who bought it new in 1982. The interior had been repainted but the estate, Schwartz said, didn't have the money to "tear out walls, update the floorplan and kitchen."

Schwartz put the three-bedroom house on the market February 2, priced at $389,000, and two weeks later cut it to $369,000. That brought in seven offers, all from rehabbers, Schwartz said. Apex bought the house in early March for $350,000, tore down walls to create a modern, open floorplan and replaced the flooring and the kitchen cabinets and appliances.

The house is now on the market for $519,900, down from Apex's original May asking price of $539,900. Schwartz said that though she's impressed with the firm's updates, she believes it's been slow to sell because the rehab left the laundry room in the basement rather than moving it up to the main floor.

That possible flub aside, Schwartz sees the Apex program as a boon to estate sellers and others with properties that need more rehab than they can afford, or have the time to do. "You're not going to sell it for top dollar," she said, "but it's off your hands."

Filler acknowledged that sellers Apex targets "don't have making top dollar as their top priority; they have getting it sold as their top priority." He said he expects his firm to acquire properties at an average of about $135,000 and sell for an average of about $400,000.

Among the Chicago-area homes Apex has rehabbed recently are: a brick bungalow on Birchdale Avenue in Elmwood Park that it bought for $210,000 in January and now has on the market at $309,900; a four-bedroom house on 72nd Street in Downers Grove, bought in April for $258,000 and now asking $379,900; and a three-bedroom split-level on Dartmouth Lane in Deerfield, bought in April for $262,000, now offered at $429,900.

Unlike a portfolio of rehab-to-rental houses, rehab-to-resale houses scattered around the map aren't a problem, Filler said. With a rental portfolio the owner has to manage and maintain, "density is efficient," he said. "But we're not looking to hold onto these any longer than we have to." To that end, he focuses on picking up homes "where we can add value with the rehab and resell it fast."


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