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Author: Mark Ainely | Partner GC Realty & Development & Co-Host Straight Up Chicago Investor Podcast

In this episode, we bring back Matt Katsaros from Wildwood Investments. Matt was previously on episode 109, and a lot has changed since then. At that point, Wildwood was still getting started. Today, Matt and his partners have developed around 400 apartments across Chicago and have worked through ground-up development, adaptive reuse, ARO requirements, capital raises, lease-ups, and the kind of project-level surprises that only show up once you are already deep into the deal.

We talk about why having the right GC partner matters, why reserves are not optional, how office-to-residential conversions actually work, and why Chicago development still has opportunity for the right operators.

Questions We Answer in This Episode

Q: What’s the housing provider tip of the week?
A: Document the condition of your property before a tenant moves in. Take photos and videos, have the tenant complete their own move-in walkthrough, and document again at move-out. Mark also points out this applies to flips and construction projects too. If a neighbor later says you damaged the alley, driveway, landscaping, or something nearby, your photos can save you.

Q: Who is Matt Katsaros?
A: Matt started at Marcus & Millichap in investment sales, later worked at Pangea on the buy side, then went to CA to learn development. In 2020, he started Wildwood Investments. Since then, Wildwood has developed roughly 400 apartments in Chicago.

Q: What did Matt learn at Pangea that still helps him today?
A: Underwriting discipline. At Pangea, they modeled everything: windows, framing, flooring, rehab costs, rent assumptions, and expenses. Matt says that same attention to assumptions applies whether you are buying a 3-flat or building 100 units from the ground up.

Q: What would Matt have done differently when starting Wildwood?
A: He wishes they could have bought and developed more during early COVID. Land and opportunity were more available then, but they had to prove the concept one deal at a time. Today, raising money is easier because they have a track record, but deal flow is much more competitive.

Q: What was one of Wildwood’s best projects?
A: The Porter, a 36-unit project at Lincoln, Fullerton, and Halsted near DePaul. They bought the site off market, built it by right, added strong retail tenants like Wells Fargo and Panera, and even put a pickleball court on the roof.

Q: How did The Porter’s location affect the design?
A: Because it was near DePaul, they could build more 2, 3, and 4-bedroom units with smaller living rooms. That layout works for young renters and recent college grads in Lincoln Park, but Matt says it would not work the same way in every neighborhood.

Q: How does Matt underwrite ground-up development?
A: The biggest number is hard cost. His GC partner handles that estimate. Then they underwrite rents, expenses, taxes, financing, and exit value. Matt says taxes have historically been one of the biggest unknowns in Chicago, and rising interest rates made projects harder, but rent growth helped offset some of that pain.

Q: Why are reserves so important?
A: Wildwood typically uses around 7% hard cost contingency, plus another 3% held by the GC, getting close to 10% total. Matt says they have used contingency on every project. If your reserves are too thin, you either cut the product or go back to investors for more money.

Q: What advice does Matt give to someone raising money for the first time?
A: Bring in an experienced partner or mentor. Matt says trying to do everything alone on your first bigger deal is extremely hard. It is better to give up part of the deal to someone who can actually help with capital, construction, or execution.

Q: How does zoning work when a project needs an upzone?
A: Matt says their successful zoning projects were on commercial corridors where housing made sense, like Ashland in Lake View. They worked with the alderman, communicated with neighbors, and tried to avoid projects that would become overly contentious.

Q: What do people misunderstand about ARO units?
A: Affordable units are not free housing and they are not random tenants placed by the city. Tenants still apply, get screened, and must qualify based on income. Matt says education is important because many neighbors misunderstand what ARO actually means.

Q: Why are office-to-residential conversions hard?
A: Light and ventilation. Apartment units need proper light and air, and many office buildings are too deep or too square to convert efficiently. Matt says the building has to lay out correctly, or the numbers do not matter.

Q: What makes Wildwood’s Streeterville conversion work?
A: The building is about 90,000 square feet and will become 72 apartments over existing retail. It has good window placement, high ceilings, and a floor plate that can support loft-style apartments. Keeping the retail tenants open during construction adds complexity, but the income helps offset carry costs.

Q: What is the Gracewood project?
A: Gracewood is a 62-unit project at 1805 W Grace near Ravenswood. The site is close to the L, so they designed the building to stay 30 feet away from the tracks and avoid needing CTA flaggers, which can add cost and slow down construction.

Q: How does Matt make money during long development timelines?
A: Wildwood earns development fees, usually around 3.5% to 4% of total project cost, plus GC fees through the construction side. The larger upside comes at sale or refinance, but the fees keep the company operating while projects are being built.

Q: Does Matt want Wildwood to scale into a huge company?
A: No. He wants to keep the business lean, with two to three projects going at a time and roughly 100 to 150 units always in process. He does not want 100 employees or a complicated corporate structure.

Q: What is Matt’s outlook on Chicago?
A: He is still positive on Chicago neighborhoods like Lincoln Park, Lake View, and Streeterville, but he is watching future supply carefully. If rates drop and a lot of entitled downtown projects start at once, he thinks supply could become a concern.

Q: What is Matt’s biggest warning for newer developers?
A: Do not buy a site and hire a random third-party GC you do not know. Ground-up construction usually involves personal guarantees, and if your GC fails, you can be in real trouble. Most successful developers either are GCs themselves or have a true GC partner.

Show Notes

00:00 Matt Katsaros opens the episode
01:52 Housing provider tip: document vacant unit condition before move-in
03:34 Matt returns to the podcast after episode 109
04:16 Matt’s background: Marcus & Millichap, Pangea, CA, and Wildwood Investments
06:20 What Pangea taught Matt about underwriting
07:27 What Matt would have done differently starting Wildwood
08:43 Why deal flow is harder today than raising capital
10:13 The Porter project at Lincoln, Fullerton, and Halsted
12:01 Underwriting hard costs, taxes, rents, and exit assumptions
14:29 Wood-frame construction, masonry exterior, and building efficiency
17:26 Raising $3.6M and why the first big raise is hard
19:47 Why reserves and contingency protect the deal
22:27 Zoning and entitlement on Ashland in Lake View
25:14 ARO, affordable units, and neighborhood misconceptions
28:42 Streeterville office-to-residential conversion
35:01 TIF, ASHAP, and tax incentives
44:29 Development fees, GC fees, and keeping the lights on
47:42 Matt’s outlook on Chicago and future supply
52:02 Lease-up strategy for larger buildings
55:42 Construction debt and simple capital stacks
61:12 Why execution matters before jumping into ground-up development
63:42 Matt’s competitive advantage: network and GC partner
63:58 First property advice: understand Chicago block by block
66:09 Chicago fact: Bunker Hill and Wildwood

Takeaways for Chicago Property Managers and Landlords

Document property condition before move-in and before construction starts.
Ground-up development lives or dies by underwriting, reserves, and execution.
A strong GC partner is one of the biggest advantages a developer can have.
Reserves are not extra money. They are what keep you from making bad decisions under pressure.
ARO units are often misunderstood. They are income-restricted units with screening, not random city placements.
Office-to-residential conversions only work when the building has the right light, air, depth, and window layout.
Chicago still has development opportunity, but block-by-block knowledge matters.
For newer developers, the wrong GC relationship can kill the deal.

Guest Name: Matt Katsaros

Guest Company: Wildwood Investments
Guest Website: http://www.wildwoodinvestmentsllc.com/

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