Inside Brooklyn investor Izzy Rotenberg’s crumbling multifamily empire

While many Chicago landlords were trying to hang on to their properties in 2022 to 2023 as the multifamily market was rocked by rising interest rates and a surge of foreclosures, one embarked upon a gutsy expansion.

Izzy Rotenberg entered a popular online real estate investing forum with his first comment in January 2023, expressing his desire to buy more Chicago apartment buildings.

“Always looking for new rental programs and anything that can improve my renting my aprtments [sic]. Always intrested [sic] in new deals in the far south side,” Rotenberg posted in a new member’s category of Bigger Pockets.

While Rotenberg was seeking to expand his professional network, he had already amassed a mini empire in the South Side. By the end of 2023, Yissocher “Izzy” Rotenberg and his deal partner Naftalie Berger had accumulated about 500 apartment units across Chicago in just two years, public records show.

Rotenberg and Berger spent at least $48 million on 25 properties in the Windy City, securing $40 million in loans along the way, Cook County data suggests.

But lenders were circling Rotenberg soon after he made those purchases.

Lenders have initiated foreclosures on a majority of Rotenberg’s properties. So far, 14 properties owned by Rotenberg and Berger are subject to foreclosure lawsuits.

Receivers appointed by the court to take over some of these properties noted mismanagement at Rotenberg’s buildings. At a 22-unit apartment complex at 7763 S. South Shore Drive, Rotenberg allegedly failed to hand over rent rolls to the receiver.

At another Rotenberg property, the 34-unit 1901 West Pryor Avenue, about 80 percent out of its 34 units are vacant, according to a listing for the property.

Rotenberg has managed to avoid a few foreclosures by selling distressed properties, but the purchaser of those buildings, Eliazer Tauber, has previously been tied to suspicious transactions in the South Side of Chicago.

Rotenberg has faced numerous building code violation complaints from the city of Chicago, which has grown increasingly frustrated with his ownership ventures.

“The city ran him out of town,” one prominent South Side real estate player said of Rotenberg.

Rotenberg didn’t return multiple requests for comment. His lenders also haven’t returned requests for comment, with an attorney for one, Asset Based Lending, declining to comment; the CEO for another, Sharestates, also declined. A lawyer for an investor suing Rotenberg over his Chicago deals declined to comment.

Cycle of spec

Rotenberg’s sudden rise and fall as a Chicago macher is not by accident.

Between 2017 and 2024, investors from New York and New Jersey scooped up thousands of units across Chicago’s South and West Side on the cheap. These investors sold between themselves and amassed higher prices and larger loans along the way. The strategy was to buy properties with no or little money down.

By March 2024, Fannie Mae caught on to this game. It has blacklisted at least eight investors, including Moshe Silber, Chaim Puretz and Boruch Drillman. An employee at Fannie warned these investors were running properties into the ground, cutting off essential maintenance and selling them to related parties, according to an email obtained by The Real Deal. 

The eight blacklisted investors managed companies controlling at least 1,235 Chicago-area apartment units, according to an analysis by The Real Deal.

Rotenberg was not named on Fannie’s blacklist. But he could be following a similar path. 

His acquisition spree of South Shore multifamily began in 2022 just as interest rates started to rise and bank lending was scarce.

The investor from Brooklyn’s Borough Park neighborhood took on high-interest loans from hard money lenders. He ran into trouble almost immediately. Lenders started foreclosing on Rotenberg just months after he secured financing in some instances.

In July 2022, Rotenberg purchased an 11-unit building at 7641 South Saginaw Avenue for $737,000 from an investor named Rama Voddi. He secured a $757,000 loan from Sharestates.

Sharestates initiated a foreclosure less than two years later, in June 2024.

Yet, Rotenberg’s property was spared from a loss. A week after the foreclosure was filed, Rotenberg inked a deal to sell the building to Tauber for $2 million, more than doubling the building’s previous sale price, remarkable for a building under foreclosure.

And it wasn’t the last time Tauber — who’s also been involved in a separate string of eyebrow-raising transactions in recent months — rescued a Rotenberg deal by paying a big markup from the property’s last sale price.

The sale resolved the foreclosure, but it led to another dispute between Rotenberg and an investor who claims he was cut out of the deal.

Spurned investor

Rotenberg is facing a handful of lawsuits from his lenders and an investor. 

He recently lost in a lawsuit brought by Brooklyn-based Shlomo Horowitz, who claimed to have majority interests in the Saginaw Avenue property as well as the Rotenberg-managed property with similar characteristics at 2814 East 78th Street.

Rotenberg purchased the properties and sold them at a significantly higher price to Tauber; Rotenberg paid $265,000 to buy the six-unit 78th Street building in 2022, public records show.

But once again, Rotenberg and his partner on the deal, Berger, were hit with a foreclosure lawsuit last year by their lender Sharestates. 

Within days of the foreclosure suit’s filing, however, Tauber bought the property for $1.1 million. (Tauber also obtained an $818,000 mortgage loan from Cliffco that resolved the foreclosure case.)

Horowitz claims he never saw a dime from the property sales. He claims he owned 75 percent of the stake in each of the Rotenberg-managed LLCs that sold the properties to Tauber. 

Horowitz won a $1.9 million judgment against Rotenberg in the suit. Rotenberg never hired an attorney to make an appearance in the case.

But the deals involving Tauber make little financial sense for the buyer. Investors in the world of high-stakes Chicago real estate would seldom be willing to pay more than double what a property sold for just a couple years before, especially one that’s in foreclosure over a loan much smaller than the new purchase price.

More suspicious are Tauber’s ties to embattled real estate attorney Mark Nussbaum, who is facing numerous lawsuits and allegations that he diverted clients’ escrow money. Nussbaum also bought properties in Chicago. Tauber signed loan documents for some of those properties.

Deferred maintenance, no rents

It’s not only lenders who are facing losses. Rotenberg’s tenants have suffered under the landlord’s alleged mismanagement.

At an 11-unit West Side property, 5449 West Quincy Street, tenants claimed they’d been without hot water for over a month. A receiver appointed to manage the building claimed it was unable to differentiate between rent-paying tenants and illegal squatters because of Rotenberg’s alleged mismanagement.

“Unfortunately, the receiver was not provided any information or leases; there are a number of questions on who a legitimate tenant is and who is not. … Ten units are occupied, but no leases have been provided to the receiver and no rent has been collected,” the receiver, Curtis Bettiker of Chicago Neighborhood Resources, wrote in a report about the Quincy Street property late last year.

Lenders have moved to hire brokers to sell multiple distressed properties linked to Rotenberg, according to marketing brochures.

At 7763 South Shore Drive, the 22-unit property that had been broken into multiple times and was sheltering homeless people, Interra Realty’s Lucas Fryman is marketing the property for $67,000 per unit, or nearly $1.5 million. The listing price is well below the $2.7 million Rotenberg paid for it in 2023. The listing advertises that more than 50 percent of the building is vacant.

The listing notice boasts the property is a “major repositioning opportunity that needs extensive renovations.”