Chicago Rental Properties

New to Real Estate · Chicago · Member since 2024 · 9 posts · 6 votes

Hello,

I am new to real estate investing and want to buy rental properties within Chicago and surrounding areas. In what areas would you recommend I buy my first rental property? I am interested in multi family rentals, single family, and utilizing the BRRR method. Thanks in advance for any advice!

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Wale LawalBusiness Member

Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes

@Michele Richard

Chicago neighborhoods and suburbs are ideal for rental properties and Building Reconstruction Redevelopment (BRRRRR) due to proximity to major development projects, affordable multi-family units, and strong rental demand. To use the BRRRR method, target 2-4 unit properties, look for emerging neighborhoods, network with local contractors, factor in property taxes, and work with an investor-friendly agent.

Good luck!

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Wale LawalBusiness Member
Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
1y
@Michele Richard
Chicago neighborhoods and suburbs are ideal for rental properties and Building Reconstruction Redevelopment (BRRRRR) due to proximity to major development projects, affordable multi-family units, and strong rental demand. To use the BRRRR method, target 2-4 unit properties, look for emerging neighborhoods, network with local contractors, factor in property taxes, and work with an investor-friendly agent.
Good luck!
[email protected]832-776-9582 Podcast Guest on Show #469
NETWORTH BUILDERS5236 Reviews
Website View Page
1 Reply
John Warren
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
1y
@Michele Richard I would start in your own backyard first. Which area do you live in? Which areas make you feel comfortable? Normally you need to find a bread and butter B class neighborhood to make money in real estate. Look for the Star Bucks and Jimmy Johns to find the right type of neighborhood.
You also will want to find an area that is very transactional. This is the part a lot of newer investors miss, but if you find a good neighborhood where very few properties trade then there won't be a market for you to find (or even know how to evaluate) a "good" deal.
0 Reply
Shuatequa JohnsonBusiness Member
Real Estate Broker · Chicago, IL · Member since 2024 · 3 posts · 0 votes
1y
Hi there,
Experienced broker, investor & LL in Chicago, IL. Ultimately, it will come down to your affordability where you can invest. But, for the best potential tenant pool, I would suggest looking to invest in neighborhoods in close proximity to hospitals, colleges, local markets, easy commute, provide sense of safety etc. Think about the things that would be important to you whether you’re a single individual, family, student or employee and decide what areas provide those things. Best of luck and feel free to reach out if you have anymore questions or concerns.
0 Reply
Jonathan KlemmBusiness Member
Moderator
Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
1y
Hey @Michele Richard! Welcome to the Chicago BiggerPockets Community!
It's always great to have new investors coming into the market.
Your question is pretty broad - I think it's always been to start with Why, How, & Where
Why are you getting into real estate & what's your end goal? Why will likely determine how because if you are looking for cashflow vs. appreciation vs. quick capital
How could it be househacking, brrrr, flip, long term -> You mentioned BRRRR, which is an awesome strategy but will only work in specific sectors of Chicagoland. finding the perfect brrrr in the current environment is extremely tough!
Where is determined by how! Because Chicago is amazing in the sense that it has prices at all levels and tons of old inventory in need of renovation (if you want to renovate).
Networking in person was the biggest help for me to get started. Here is some events posted on BP: https://www.biggerpockets.com/forums/521-real-estate-events-...
[email protected]
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Paul De Luca
Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes
1y
@Michele Richard

Welcome! It totally depends on your budget, target areas, and overall buying criteria. I suggest connecting with a few investor-friendly lenders to discuss financing options like rehab loans & hard money. Once you have your financing & budget squared away, you can narrow down the areas you want to focus on & ultimately purchase in.

If you need a few referrals, let me know.
0 Reply
Mike H.
Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
1y
Go wherever you can find deals. But the closer to where you live is always better so you can self manage and save money. Also much easier to manage contractors to rehab.

The key is finding discounts. If you're paying retail here, the property taxes make it really tough to cash flow. You need to be all in (purchase plus rehab) at 70% ARV or better - maybe 75%.

The other thing I would look at is appreciation and cash flow. You typically get one better than the other. So do you want more appreciation, then you won't have as much cash flow. Or vice versa.

The lesser areas can typically cash flow better and have more opportunities for bigger discounts. But they're more difficult to manage because of a lesser renter pool and the appreciation tends not to be as great.

To me, I always stayed away from those areas even if the discounts and cash flow were greater. But I stayed out of the super expensive areas too. I liked the smaller towns with nicer schools. Rented great. Had to work to find the discounts - but now those are much much harder to come by. And the numbers that I had hoped for when I started ended up being every bit as good if not way better to be honest.

I'd say do one or two and then see if you like it. If you do, set a goal for how many you want to do every year and you'll force yourself to find a way to hit that goal. In 10 years, you'll be kicking yourself for not buying double the number of homes you bought.
1 Reply
Quentin Ambrose
Real Estate Agent · Chicago IL, USA · Member since 2024 · 22 posts · 10 votes
1y
Hi Michele, I'm a Realtor & PM in the Chicago and Northwest Indiana markets. I would suggest looking into smaller towns on the outskirts of Chicago, these areas can be great for SFH investments. Also, research the landlord and tenant laws/ordinances.
1 Reply
Riley Poppell
Lender · Chicago · Member since 2024 · 88 posts · 24 votes
1y
Some good areas in Chicago right now are Irving Park and Humboldt park. More people are moving here and values are going up so your investment could result in a solid increase in value.
1 Reply
Amy Falson
New to Real Estate · South Elgin, IL · Member since 2024 · 6 posts · 5 votes
1y
@Michele Richard I am in the same boat as you. Brand new and looking to get started with small multi family rentals. I’m not sure where you’re located but I’m located out west of the city in the Elgin area. Would love to connect and maybe bounce some ideas off one another!
1 Reply
Dee Hart
Member since 2024 · 18 posts · 5 votes
1y
@Amy Falson and @Michele Richard I can email you deals that come my way in the Chicago-land area(s). There are lots of motivated sellers out there. Wish you two the best of luck
1 Reply
Amy Falson
New to Real Estate · South Elgin, IL · Member since 2024 · 6 posts · 5 votes
1y
Quote from @Dee Hart:

@Amy Falson and @Michele Richard I can email you deals that come my way in the Chicago-land area(s). There are lots of motivated sellers out there. Wish you two the best of luck
Thanks Dee! Just requested to connect with you now.
1 Reply
Michele Richard
OP
New to Real Estate · Chicago · Member since 2024 · 9 posts · 6 votes
1y
Quote from @Quentin Ambrose:

Hi Michele, I'm a Realtor & PM in the Chicago and Northwest Indiana markets. I would suggest looking into smaller towns on the outskirts of Chicago, these areas can be great for SFH investments. Also, research the landlord and tenant laws/ordinances.
Thank you for taking the time to reply to my post. What are your thoughts on Evergreen park area? I saw some great neighborhoods surrounding the hospitals in that area and reasonably priced. My concern is they would be great cash flow but not have much appreciation. Some of the homes only appreciation 20K in the last 15-20 years. Would this area still be a place worth looking into?
0 Reply
Michele Richard
OP
New to Real Estate · Chicago · Member since 2024 · 9 posts · 6 votes
1y
Quote from @Mike H.:

Go wherever you can find deals. But the closer to where you live is always better so you can self manage and save money. Also much easier to manage contractors to rehab.

The key is finding discounts. If you're paying retail here, the property taxes make it really tough to cash flow. You need to be all in (purchase plus rehab) at 70% ARV or better - maybe 75%.

The other thing I would look at is appreciation and cash flow. You typically get one better than the other. So do you want more appreciation, then you won't have as much cash flow. Or vice versa.

The lesser areas can typically cash flow better and have more opportunities for bigger discounts. But they're more difficult to manage because of a lesser renter pool and the appreciation tends not to be as great.

To me, I always stayed away from those areas even if the discounts and cash flow were greater. But I stayed out of the super expensive areas too. I liked the smaller towns with nicer schools. Rented great. Had to work to find the discounts - but now those are much much harder to come by. And the numbers that I had hoped for when I started ended up being every bit as good if not way better to be honest.

I'd say do one or two and then see if you like it. If you do, set a goal for how many you want to do every year and you'll force yourself to find a way to hit that goal. In 10 years, you'll be kicking yourself for not buying double the number of homes you bought.

Thank you for the reply! In your experience, how many properties did you manage locally before you felt it was too much and needed additional help? My current full time job is in healthcare 4 days a weeks. I am willing to manage myself but does that seem reasonable?
0 Reply
Michele Richard
OP
New to Real Estate · Chicago · Member since 2024 · 9 posts · 6 votes
1y
Quote from @John Warren:

@Michele Richard I would start in your own backyard first. Which area do you live in? Which areas make you feel comfortable? Normally you need to find a bread and butter B class neighborhood to make money in real estate. Look for the Star Bucks and Jimmy Johns to find the right type of neighborhood.
You also will want to find an area that is very transactional. This is the part a lot of newer investors miss, but if you find a good neighborhood where very few properties trade then there won't be a market for you to find (or even know how to evaluate) a "good" deal.
Hello, and thank you for your reply. I currently live downtown and am renting. I have looked at west loop and really like that area but it has gotten very expensive. I also have seen some homes around evergreen park near a hospital I work at that are 300-400K homes and seem to be in a good community. Should I continue to look in that area or shift my focus back to the expanding west loop?
0 Reply
Michele Richard
OP
New to Real Estate · Chicago · Member since 2024 · 9 posts · 6 votes
1y
Quote from @Jonathan Klemm:

Hey @Michele Richard! Welcome to the Chicago BiggerPockets Community!
It's always great to have new investors coming into the market.
Your question is pretty broad - I think it's always been to start with Why, How, & Where
Why are you getting into real estate & what's your end goal? Why will likely determine how because if you are looking for cashflow vs. appreciation vs. quick capital
How could it be househacking, brrrr, flip, long term -> You mentioned BRRRR, which is an awesome strategy but will only work in specific sectors of Chicagoland. finding the perfect brrrr in the current environment is extremely tough!
Where is determined by how! Because Chicago is amazing in the sense that it has prices at all levels and tons of old inventory in need of renovation (if you want to renovate).
Networking in person was the biggest help for me to get started. Here is some events posted on BP: https://www.biggerpockets.com/forums/521-real-estate-events-...

Thank you so much for suggesting these events to me. I will definitely be attending some of those :)
1 Reply
Quentin Ambrose
Real Estate Agent · Chicago IL, USA · Member since 2024 · 22 posts · 10 votes
1y
I like the Evergreen Park area, I used to be a Project Manager at W.B.F. Construction and the main office is in Evergreen Park. There’s a nice mixture of commercial and residential properties and Evergreen Park is a very stable market. Your downpayment would be instant equity and your consistent cash flow would lead to equity over time. Finding cheap deals in this area might not be easy.

Quote from @Michele Richard:
Thank you for taking the time to reply to my post. What are your thoughts on Evergreen park area? I saw some great neighborhoods surrounding the hospitals in that area and reasonably priced. My concern is they would be great cash flow but not have much appreciation. Some of the homes only appreciation 20K in the last 15-20 years. Would this area still be a place worth looking into?

0 Reply
John Warren
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
1y
@Michele Richard west loop will be challenging for investing since the area exploded so much the last few years. It is a great spot for restaurants though!
I would focus more in established neighborhoods if I were you. You may want to establish what kind of property you want as well. For instance, if you want to do 2-4 units then West loop won't work, but Evergreen Park or similar areas might due to the housing stock.
I would probably think through which neighborhoods you personally would want to live in as well in case you decide to house hack.
0 Reply
Sean WagnerBusiness Member
Real Estate Broker · Chicago · Member since 2021 · 20 posts · 14 votes
1y
Where ever you can find the best deal. Think areas where there aren't too many cooks in the kitchen already. Logan Square, Pilsen, Avondale look and sound good on paper but that is where everyone is looking. Depending on your risk tolerance and knowledge to the area, the south and west sides are still loaded with gems. You just have to know the market. Some areas that are on the path of appreciation and aren't yet completely picked over include Little Village, Hermosa, Belmont Cragin, Mckinley Park, etc.
I am a local investor as well as an agent so if you need any help please don't hesitate to reach out
[email protected]312-338-3004
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