What is different about Chicago Multifamilies

24 Replies

Of all the major cities in the US, Chicago seems to have MF listings that have numbers that look better, at least on paper. I can find multiple listing in the 300-500k range and have 9-12% net cap. No other city has decent MF in this price range with that cap rate.

What is special about Chicago?

I live in Chicago but invest in Florida. There are definitely better cap rates in certain areas here but for me, I'm leery about the Chicago market.

-We're losing about 5,000 people per year (over the last five years) yet builders are continuing to build at a high rate. 

-We have some of the highest crime in the nation. 

-There is a lot of political unrest (we don't have the funds as a city to cover the pension demands for retirees).

-The laws favor the tenants. 

I love it here, as a lifestyle, and I believe in Chicago's future but I don't know if this is the time to jump into the market.  

Maybe if your approach is strictly to buy and hold you'll be fine. We're the 3rd largest city in the U.S. so right now we don't even feel the population decline - it's super easy to find tenants!

But for me, I'd rather hunt for a deal in a growing market (like Florida). 

To add context to what @Jaren Barnes is saying... SOME areas of Chicago have a declining population, SOME areas of Chicago have high crime.  The city alone is 234 sq miles, which is huge.  So it is impossible to use blanket statistics and apply it to the whole market.  You need to be careful where you invest, but not all areas are bad.

Also, the laws are tenant friendly, but I have been a landlord in Chicago for 8 years and have never had an issue with them in the A/B areas

@Mahesh Sam Our pricing is still not up to where the 2007 peak was in most areas but higher in some areas.  It is important to have multiple boots on the ground that can guide your journey and make sure you are buying right.  You have a place like BP to help you with that.  Feel free to run any address by me and I can give you the feedback you need to know or if I don't know about the area I will connect you with someone that does.  

  @Jaren Barnes I have to say your points may be valid for certain areas of Chicago but not a qualified reflection of the city as a whole.   Depending on any one persons investment strategy or goals, location can be relative.  I too have invested in multiple properties in Florida and Florida and their local economy has its pros and cons as well.

Thanks @Mark Ainley . Being new to REI and an investor from Canada, solid advice has been to not venture into an MF as a first investment and that to in a region with challenges. So I am going to hold off for now and focus on an SFR.

https://www.loopnet.com/Listing/9335-S-South-Chicago-Ave-Chicago-IL/16404915/

https://www.loopnet.com/Listing/7421-S-Coles-Ave-Chicago-IL/17239821/

But these are attractive numbers, I would like to know what the challenges are going to be and if such an MF in that region can be managed 100% remotely through a property manager.

@Mahesh Sam Who told you stay away from MF as your 1st investment? From your post string it appears you are looking to do remote turnkey investing, so you are not going to be involved in the daily operations. If that is the case, regardless if you are a newbie or not, MF should be considered as the ROI is better and there are more options. If you are investing locally, you can still consider MF as your 1st investment. However I would suggest you do it as a JV with someone who already is experienced.

@Mahesh Sam I would not advice you having to stay away from SFH and I would say in the areas you are looking there is more risk with a SFH then a multi family. I have sent you a PM with my thoughts on your listings along with my contact to reach out anytime to discuss areas.

@Mark Ainley that's awesome! I'm happy to be wrong! I love Chicago. Where do you think are the best places to invest in the Chicago area and why?

@Brie Schmidt would love your insight on this as well. 

I'm working with a partner towards getting my first larger multifamily (30-100 units), and did a pretty extensive research project about a month ago that took me an entire weekend to complete.

Ideally they say you should do your home market, so I looked closely at Chicago.

 I compared 8 different markets all across the US and unfortunately, Chicago ranked the worst in my analysis. 

Orlando FL scored the best, and Tampa FL got second. 

This was the criteria I used (it's heavily based on the Best Ever Syndication Apartment book written by Joe Fairless):

Criteria

  1. Unemployment
    1. Get this information from Census.gov under the “Selected Economic Characteristics” data table
    2. Calculate the unemployment change over a five-year period using the unemployment percentage for the city for the last five years
      1. Ideally, you want one that is decreasing
      2. A low, stagnant rate is acceptable
      3. A high and/or low increasing rate is unfavorable

  1. Population
    1. Both the city and MSA population data can be found on Census.gov
      1. The city data will be under theAnnual Population Estimates data table
      2. The MSA data is located in the “Annual Estimate of the Resident Population” data table
    2. Calculate the population change for both the target market city and the metropolitan statistical area (MSA) using the population data for the last five years for the market
      1. An increasing population is ideal
      2. A stagnant or decreasing trend is unfavorable, Especially if apartment supply is on the rise

  1. Population Age
    1. Find this data on the Census.gov website under the “Demographic Characteristics” table.
    2. Calculate the population change for different age ranges using the population age data for the most current year and the five previous years
      1. The increase or decrease of the proportion of people in specific age ranges will dictate the property types that will be in the most demand.

  1. Job Diversity
    1. Census.gov under the “Selected Economic Characteristics” table
    2. Determine whether a specific industry is responsible for a large percentage of jobs or not.
      1. Best Case:
        1. A market with outstanding job diversity will have no single industry that employs more than 25% of the employed population
        2. 20% is e even better
      2. Decent Case:
        1. If one single industry does employ more than 25% of the employed population, it’s one you trust the future of.
          1. This is determined by:
            1. Looking at the top employers or businesses and your research (talking to locals, reading local articles)

  1. Top Employers and Businesses
    1. Find this information by Googling “CITY NAME + TOP EMPLOYERS)
    2. Determine the top 10 employers in the market
      1. If a certain industry is dominant in a market, analyzing the top employers and businesses allows you to determine whether the majority of those jobs are provided by one or two companies, or whether the risk is spread across multiple companies.
      2. This will allow you to track any developments within that company (are they creating a new facility, or cutting jobs?)
      3. Ideally, you want several employers to spread the risk associated with a dominant industry

  1. Supply and Demand
    1. Census.gov under the “Selected Housing Characteristics” table
    2. Determine by analyzing the five-year rental vacancy rates and median rental rates in the market, as well as the year-on-year change in the number of building permits created for commercial properties (five or more units)
      1. The number of five or more unit building permits won’t tell us much on it’s own.
        1. However, a huge red flag to you would be when you see an increase in the number of permits in combination with an increasing vacancy rate and/or a decrease in median rents
      2. As vacancy increases, median rent and new building permits should decrease… and vice versa
      3. Best Case:
        1. Low or decreasing vacancy rates and increasing median rents
      4. Decent Case:
        1. High vacancy rate that is decreasing
        2. Stagnant vacancy rate
      5. Worst Case:
        1. Increasing vacancy rate and/or decreasing median rent
        2. An increase in the number of building permits (5+ units) in combination with an increasing vacancy rate and/or a decrease in median rents

  1. Miscellaneous
    1. Research Other Characteristics relevant to the strength or weakness of a market
      1. Examples:
        1. Landlord vs. tenant-friendly state?
        2. Property taxes?
        3. Upcoming construction?
        4. Is this market considered one of the “top markets” in the country?

Order of Importance:

Tier 1 Ranking:

Supply/Demand, Job Diversity

Tier 2 Ranking:

Top Employers, Population and Unemployment

Tier 3 Ranking:

Age, Misc.




@Brie Schmidt ... but what areas in Chicago have a population increase compared to the overall population decline? What areas have low crime and how does it compare to, say, the national average?

You say you haven't had issues in A/B areas... but what are those areas? 

And did you get into those areas 8 years ago, and were able to ride a growth wave? 

Where would you invest now, if you were starting brand new?

I want to be very clear where I'm coming from: I GENINUNELY want to invest in Chicago. My family and I plan on settling here (I actually live in NW Indiana, currently 45 minutes from downtown Chicago but the plan is to move back to the city next year at some point).

So I'm genuinely seeking your advice, @Brie Schmidt - I know you're one of the leading experts on this market and have been active in it for years.

@Mark Ainley I'm looking forward to your insight as well!

@Mahesh Sam - I am with @Brie Schmidt and @Mark Ainley . Real estate investing is all relative and there can be deals found in every market across the country and probably the world for that matter. Even with people leaving as @Jaren Barnes pointed out that doesn't mean the rental market in Chicago is going to fall apart.  Also, A&B areas are the northwest side of the city.....logan square, bucktown, Avondale, Irving park, etc.

People have to invest based on their comfort level not based on how good or bad a deal is because if you can't stomach the risk then you will cave early and lose.  Real estate investing is a LONG term investment.

@Jaren Barnes here is a good article on Chicago's net absorption and rent growth as it applies to the 2020 apartment market:  https://www.connect.media/downtown-chicagos-apartment-market-holds-up-even-after-building-boom/?utm_content=106123111&utm_medium=social&utm_source=linkedin&hss_channel=lcp-6462459

Let me know if you have any specific Chicago sub-market questions. I analyze thousands of multi-family units and hundreds of buildings every year (from 2-flats to 200+ unit suburban complexes). Happy to answer any questions about how buyers and sellers are looking at taxes, rent growth, etc. Here to help!



@Mahesh Sam the reason why those properties look attractive is because they are in unattractive neighborhoods. You won't find deals like that in "desirable" neighborhoods

@Jaimie Steinher thank you! I really appreciate your post. I think you're the only person on this thread that has given me anything remotely quantifiable. 

I thought the article was good - I'll PM you with some follow up questions maybe we can work together when I move back to the city next year.

@Jonathan Klemm Thanks for your comment! I agree that those are A&B areas but I don't know if you're going to catch the path of growth there - maybe if you got an amazing deal, but I don't think you'll see 12 caps like @Mahesh Sam was mentioning. 

To your defense though, I'm not going to see those cap rates in the Orlando market either - and you might see higher cap rates on average in good Chicago neighbors compared to Orlando... but when the entire metropolitan area is bursting with growth like Orlando or Tampa... where as a whole, people are leaving Chicago (and the midwest in general) I just don't know if it's a good trend.

Sure if your goal is strictly cash flow and holding for the long haul Chicago can definitely work and I'll probably eventually figure it out and invest here myself... I'm just leery!

@Jaren Barnes - You can google population and crime stats by neighborhood.

I do not specialize in the entire city of Chicago, it is way too big to have expertise in the entire market.  The areas I cover are Pilsen to Jefferson Park to Evanston and I would consider that area A/B.  Within that area are about a dozen sub-markets and each have their own pros / cons

Every investor is different and needs to figure out what their own desires and risk tolerances are.  Taking my opinion about where to invest is like saying you are going to buy the exact car I have just because I have it. My desires and risk tolerances are going to be different than yours.  

The areas that have the high cap rate are located in lower income neighborhoods.  These properties are more challenging to manage, hence more risky.  This is where most of the crime in Chicago happens that we all hear about.

Chicago's north side has been booming for many years, and numerous neighborhoods have rapidly appreciated and essentially been rebuilt.  This is good, pricey and attractive real estate that attracts professionals and middle class residents.  The cap rates are very low.

Others on this thread have mentioned strict tenant laws.  On the whole, landlords can still thrive once they learn the tenant ordinance, which is easily to follow.  We do not face rent control yet, which is a trend nationally.

Population loss has been located mostly in the lower income neighborhoods - the high cap rate areas that you mentioned.  

The real issue that causes poor investment sentiment in Chicago is the poor financial health of the City. There are budget shortfalls, unfunded pensions and most importantly, real estate taxes have consistently been going up faster than inflation. And probably faster than rental increases.

The City and County Assessor are politically progressive, so low income neighborhood real estate tax increases have been moderate.

Last, I consistently view apartment inventory for sale in Chicago. I think the pricing has gone up significantly in the last five years and I am not bullish on most of these deals. This is less of a Chicago thing, then the capital markets. Low interest rates and easier access to capital sent asset prices soaring in most markets across the United States.

Originally posted by @Mahesh Sam :

Of all the major cities in the US, Chicago seems to have MF listings that have numbers that look better, at least on paper. I can find multiple listing in the 300-500k range and have 9-12% net cap. No other city has decent MF in this price range with that cap rate.

What is special about Chicago?

  • Chicagoland- which includes Chicago city proper plus the surrounding suburbs has over 100 submarkets. Some of the submarkets in Chicago city property have their own submarkets. Trying to generalize Chicago is a fool's game. One that I'm alright with to keep the fool's out.
  • Because there are so many submarkets there's a diversity of opportunity. There are some areas that are booming so you can jump on the bandwagon. There are some other areas that are on the verge of gentrification & other areas that are not, but believe it or not savvy investors are making money in all of these areas.
  • Chicago was founded in 1833 (Yes I had to look that up) I looked it up because what has always made Chicago special since it's founding is it has always served as a logistics hub for the Midwest. First the lake, then trains, now the airports. As a hub, Chicago still attracts companies; which attract people, who need housing. 
  • Cost of living- There are a lots of complaints about housing costs in Chicago along with taxes. Some of the submarkets are going to die in Chicago because of taxes, but when one compares housing costs in Chicago to the coasts, it's a pittance.

 

@Mahesh Sam , @Brie Schmidt , @Jonathan Klemm and others.

I had my VAs do an in-depth research project on every zip code in Chicago and I got some pretty interesting results.

It's very much a layman's approach but I still think the insight is valuable so I wanted to share with you all.

What I had them do was pull data from https://www.bestplaces.net/ which is a pretty cool website that provides a lot of market data (for free! - not affiliated with them at all). 

I had my team pull the following criteria: 

-Population Growth Percentage from 2010 to present

-Violent Crime Ranking (Violent crime is composed of four offenses: murder and nonnegligent manslaughter, forcible rape, robbery, and aggravated assault. Their system ranks areas from 1 to 100. The average across the USA is 22.7 for their system)

-Property Crime Ranking (Property Crime includes the offenses of burglary, larceny-theft, motor vehicle theft, and arson. The US average is 35.4 for their system)

-Future Projected Job Growth (The US average is 33.5% for their system)

-Job Growth Over the Last Year

-Home Value Growth Over the Last 10 Years

-Home Value Growth Over the Last 5 Years

-Home Value Growth With 12 Months 

----

My Noteworthy Take-Aways

1. The safest zip code in all of Chicago was WORSE than the national average for violent crime. 

The safest zip code was 60706, which is the Norridge/Harwood Heights area. It ranked 23.80 and (again) the national average is 22.7. 

The average ranking for violent crime for all of Chicago's zip codes was 56.87 - which is INSANE.

So, no matter how you slice it, Chicago is a crime invested city!

2. All that said, if you look past this fact, population growth has indeed been consistent in CERTAIN zip codes and not in others. 

The main areas of growth (which are typically priced at a premium) are:

-60603 Chicago Loop (The Loop) neighborhood, Loop neighborhood

-60606 Chicago Loop (The Loop) neighborhood, Loop neighborhood, New Eastside neighborhood, River North neighborhood, West Loop neighborhood

-60601 Chicago Loop (The Loop) neighborhood, Loop neighborhood, New Eastside neighborhood

-60661 Greektown neighborhood, Near West Side neighborhood, West Loop neighborhood

-60654 River North, Fulton River District

-60607 Fulton Market neighborhood, Greektown neighborhood, Little Italy neighborhood, Near West Side neighborhood, Printer's Row (Printers Row) neighborhood, University Village neighborhood, West Loop neighborhood

-60604 Chicago Loop (The Loop) neighborhood, Loop neighborhood

-60611 Gold Coast neighborhood, Magnificent Mile (Michigan Avenue) neighborhood, Near North Side neighborhood, River East neighborhood, Streeterville neighborhood

-60657 Lakeview (Wrigleyville) neighborhood, Lakeview East (East Lakeview) neighborhood, Northalsted (Boys Town) neighborhood, Roscoe Village neighborhood

-60605 Loop neighborhood, Near South Side neighborhood, Printer's Row (Printers Row) neighborhood, South Loop neighborhood

-60602 Chicago Loop (The Loop) neighborhood, Loop neighborhood

-60642 Goose Island, Noble Square, River West

-60614 Bucktown neighborhood, Depaul neighborhood, Lincoln Park neighborhood

-60613 Lakeview (Wrigleyville) neighborhood, North Center neighborhood, Northalsted (Boys Town) neighborhood, Uptown neighborhood

3. The areas with a population decline, are: 

-60609 Armour Square neighborhood, Bridgeport neighborhood, Canaryville neighborhood, Fuller Park neighborhood, Gage Park neighborhood, Grand Boulevard neighborhood, McKinley Park neighborhood, New City (Back of the Yards) neighborhood

-60628 Pullman neighborhood, Riverdale neighborhood, Roseland neighborhood, Washington Heights neighborhood, West Pullman neighborhood

-60649 South Shore neighborhood, Woodlawn neighborhood

-60608 Bridgeport neighborhood, Lawndale neighborhood, Lower West Side (Pilsen) neighborhood, McKinley Park neighborhood, Medical Village neighborhood, North Lawndale neighborhood, South Lawndale (Little Village) neighborhood, Tri-taylor neighborhood, University Village neighborhood

-60651 Austin neighborhood, Humboldt Park neighborhood

-60623 Lawndale neighborhood, North Lawndale neighborhood, South Lawndale (Little Village) neighborhood

-60656 Norwood Park neighborhood, O'Hare neighborhood

-60641 Avondale Neighborhood, Belmont Cragin neighborhood, Cragin (Belmont Cragin) neighborhood, Hermosa neighborhood, Irving Park neighborhood, Portage Park neighborhood

-60660 Andersonville neighborhood, Edgewater neighborhood

-60626 Rogers Park neighborhood

-60804 Clyde neighborhood, Lawndale neighborhood

-60805 Evergreen Park

4. Now outside of the fact that they have a population decline, these areas seem like they would otherwise be a great market:

-60656 Norwood Park neighborhood, O'Hare neighborhood

-60641 Avondale Neighborhood, Belmont Cragin neighborhood, Cragin (Belmont Cragin) neighborhood, Hermosa neighborhood, Irving Park neighborhood, Portage Park neighborhood

-60804 Clyde neighborhood, Lawndale neighborhood

-60805 Evergreen Park (outside of Norridge, this zip code has the safest ranking for violent crime: 24.40)

5. The areas with a higher than average crime ranking (based on the Chicago average of 56.87) are:

-60615 Grand Boulevard neighborhood, Hyde Park neighborhood, Kenwood neighborhood, Washington Park neighborhood

-60629 Clearing neighborhood, Gage Park neighborhood, Marquette Park (Chicago Lawn) neighborhood, West Elsdon neighborhood, West Lawn neighborhood

-60639 Austin neighborhood, Belmont Cragin neighborhood, Cragin (Belmont Cragin) neighborhood, Galewood neighborhood, Hermosa neighborhood, Humboldt Park neighborhood

-60632 Archer Heights neighborhood, Brighton Park neighborhood, Gage Park neighborhood, Garfield Ridge neighborhood, Lawndale neighborhood, South Lawndale (Little Village) neighborhood, West Elsdon neighborhood

-60647 Bucktown Neighborhood, Humboldt Park neighborhood, Logan Square neighborhood, West Park neighborhood, West Town neighborhood, Wicker Park neighborhood

-60644 Austin neighborhood, Madison Square neighborhood

-60624 East Garfield Park neighborhood, Humboldt Park neighborhood, North Lawndale neighborhood, West Garfield Park neighborhood

-60619 Avalon Park neighborhood, Burnside neighborhood, Chatham neighborhood, Greater Grand Crossing neighborhood, Pill Hill (Calumet Heights) neighborhood, Roseland neighborhood, South Shore neighborhood

-60633 Hegewisch neighborhood, South Deering neighborhood

-60622 Bucktown neighborhood, Goose Island neighborhood, Near North Side neighborhood, Noble Square neighborhood, River West neighborhood, Ukrainian Village neighborhood, West Park neighborhood, West Town neighborhood, Wicker Park neighborhood

-60643 Beverly neighborhood, Brainerd neighborhood, Morgan Park neighborhood, Washington Heights neighborhood, West Pullman neighborhood

-60637 Greater Grand Crossing neighborhood, Hyde Park neighborhood, South Shore neighborhood, Washington Park neighborhood, Woodlawn neighborhood

-60827 Fay's Point neighborhood, Riverdale neighborhood

-60617 Avalon Park neighborhood, East Side neighborhood, Hegewisch neighborhood, Jeffery Manor neighborhood, Pill Hill (Calumet Heights) neighborhood, South Chicago neighborhood, South Deering neighborhood

-60640 Andersonville neighborhood, Edgewater neighborhood, Lincoln Square neighborhood, Ravenswood neighborhood, Uptown neighborhood

-60620 Ashburn neighborhood, Auburn Gresham neighborhood, Beverly neighborhood, Brainerd neighborhood, Chatham neighborhood, Greater Grand Crossing neighborhood, Roseland neighborhood, Washington Heights neighborhood

-60610 Cabrini-Green (Cabrini Green) neighborhood, Gold Coast neighborhood, Goose Island neighborhood, Magnificent Mile (Michigan Avenue) neighborhood, Near North Side neighborhood, New Eastside neighborhood, Noble Square neighborhood, Old Town neighborhood, River North neighborhood, River West neighborhood, Ukrainian Village neighborhood

-60612 East Garfield Park neighborhood, Humboldt Park neighborhood, Medical Village neighborhood, Near West Side neighborhood, Tri-taylor neighborhood, Ukrainian Village neighborhood, University Village neighborhood, West Town neighborhood

-60659 Lincoln Square neighborhood, North Park neighborhood, West Ridge (West Rogers Park) neighborhood

-60653 Bronzeville neighborhood, Douglas neighborhood, Grand Boulevard neighborhood, Kenwood neighborhood, Oakland neighborhood

-60616 Armour Square neighborhood, Bridgeport neighborhood, Chinatown neighborhood, Douglas neighborhood, Lower West Side (Pilsen) neighborhood, Near South Side neighborhood, South Loop neighborhood

-60621 Englewood neighborhood, Greater Grand Crossing neighborhood, Washington Park neighborhood

-60636 Gage Park neighborhood, Marquette Park (Chicago Lawn) neighborhood, West Englewood neighborhood

6. Areas that are somewhat known as strong markets to invest in, and have the data to back it up are as follows (but still might be more on the pricy side):

-60645 Rogers Park neighborhood, Rogers Park neighborhood, West Ridge (West Rogers Park) neighborhood

-60630 Albany Park neighborhood, Irving Park neighborhood, Jefferson Park neighborhood, North Park neighborhood, Portage Park neighborhood, Sauganash neighborhood

-60618 Avondale Neighborhood, Irving Park neighborhood, North Center neighborhood ,Roscoe Village neighborhood

-60625 Albany Park neighborhood, Lincoln Square neighborhood, North Park neighborhood, Ravenswood neighborhood

7. The Areas that stood out to me (primarily because they at least at SOME level of growth and were lower than the Chicago average for violent crime) are:

-60638 Clearing neighborhood

-60652 Ashburn neighborhood, Scottsdale neighborhood, West Lawn neighborhood

-60646 Forest Glen neighborhood, Jefferson Park neighborhood, North Park neighborhood, Norwood Park neighborhood, Sauganash neighborhood

-60706 Norridge, Harwood Heights

-60655 Beverly neighborhood, Morgan Park neighborhood, Mount Greenwood neighborhood

-60634 Belmont Cragin neighborhood, Cragin (Belmont Cragin) neighborhood, Dunning neighborhood, Montclare neighborhood, O'Hare neighborhood, Portage Park neighborhood

-60707 Belmont Cragin neighborhood, Conti Circle (Conti) neighborhood, Cragin (Belmont Cragin) neighborhood, Galewood neighborhood, Montclare neighborhood

-60803 Howes Landing Boat Launch neighborhood, Laramie Square neighborhood, Navajo Hills neighborhood

Now I have no idea where these fall in terms of price or cap rates, but they are all neighborhoods that had decent to good growth and were (again) lower than the Chicago average for violent crime (still all over the national average) AND they are all neighbors I haven't heard much about around real estate circles. 

8. Some Other Things That Jump Out: 

1. -60636 Gage Park neighborhood, Marquette Park (Chicago Lawn) neighborhood, West Englewood neighborhood

-60621 Englewood neighborhood, Greater Grand Crossing neighborhood, Washington Park neighborhood

-60653 Bronzeville neighborhood, Douglas neighborhood, Grand Boulevard neighborhood, Kenwood neighborhood, Oakland neighborhood

-60616 Armour Square neighborhood, Bridgeport neighborhood, Chinatown neighborhood, Douglas neighborhood, Lower West Side (Pilsen) neighborhood, Near South Side neighborhood, South Loop neighborhood

-60653 Bronzeville neighborhood, Douglas neighborhood, Grand Boulevard neighborhood, Kenwood neighborhood, Oakland neighborhood

-60659 Lincoln Square neighborhood, North Park neighborhood, West Ridge (West Rogers Park) neighborhood

-60612 East Garfield Park neighborhood, Humboldt Park neighborhood, Medical Village neighborhood, Near West Side neighborhood, Tri-taylor neighborhood, Ukrainian Village neighborhood, University Village neighborhood, West Town neighborhood

These have some of the higher ratings for violent crime BUT they also have some of the higher population growth percentages.

2.The Future Projected Job Growth for EVERY zip code was LOWER than the national average. The national average for Future Projected Job Growth according to BestPlaces is 35.4 and all the zip codes where around 25.70 percent. 

The best was:

60707 Belmont Cragin neighborhood, Conti Circle (Conti) neighborhood, Cragin (Belmont Cragin) neighborhood, Galewood neighborhood, Montclare neighborhood and it ranked 26.10. 

3. Job Growth Over the Last Year was all at a negative 0.2% (though it's possible this was just an average for the city as a whole). 

4. In terms of Home Values, I won't bother going here because everywhere except certain areas with population decline and high crime are going up. 


----

SUMMARY:

-Chicago has some of the highest property taxes in the nation

-Chicago has some of the worst crime in the nation

-Chicago has tenant-friendly laws

-Chicago faces extreme political and financial issues related to the state pension 

-Chicago as a whole is at a population decline (though some specifc zip codes are growing like CRAZY - primarily around the Loop)

-Chicago as a whole is at a job growth decline

-Chicago has a lower than average Future Projected Job Growth

I HATE that this is the case!

All this said, if I were to buy in Chicago, I'd personally be looking at:

-60638 Clearing neighborhood

-60652 Ashburn neighborhood, Scottsdale neighborhood, West Lawn neighborhood

-60646 Forest Glen neighborhood, Jefferson Park neighborhood, North Park neighborhood, Norwood Park neighborhood, Sauganash neighborhood

-60706 Norridge, Harwood Heights

-60655 Beverly neighborhood, Morgan Park neighborhood, Mount Greenwood neighborhood

So there you guys go - hope you find it helpful!

Updated 6 months ago

There is a spelling error. I say "crime invested" it should read: crime-infested city

Originally posted by @Jaren Barnes :

@Mahesh Sam , @Brie Schmidt , @Jonathan Klemm and others.

I had my VAs do an in-depth research project on every zip code in Chicago and I got some pretty interesting results.

It's very much a layman's approach but I still think the insight is valuable so I wanted to share with you all.

What I had them do was pull data from https://www.bestplaces.net/ which is a pretty cool website that provides a lot of market data (for free! - not affiliated with them at all). 

I had my team pull the following criteria: 

-Population Growth Percentage from 2010 to present

-Violent Crime Ranking (Violent crime is composed of four offenses: murder and nonnegligent manslaughter, forcible rape, robbery, and aggravated assault. Their system ranks areas from 1 to 100. The average across the USA is 22.7 for their system)

-Property Crime Ranking (Property Crime includes the offenses of burglary, larceny-theft, motor vehicle theft, and arson. The US average is 35.4 for their system)

-Future Projected Job Growth (The US average is 33.5% for their system)

-Job Growth Over the Last Year

-Home Value Growth Over the Last 10 Years

-Home Value Growth Over the Last 5 Years

-Home Value Growth With 12 Months 

----

My Noteworthy Take-Aways

1. The safest zip code in all of Chicago was WORSE than the national average for violent crime. 

The safest zip code was 60706, which is the Norridge/Harwood Heights area. It ranked 23.80 and (again) the national average is 22.7. 

The average ranking for violent crime for all of Chicago's zip codes was 56.87 - which is INSANE.

So, no matter how you slice it, Chicago is a crime invested city!

2. All that said, if you look past this fact, population growth has indeed been consistent in CERTAIN zip codes and not in others. 

The main areas of growth (which are typically priced at a premium) are:

-60603 Chicago Loop (The Loop) neighborhood, Loop neighborhood

-60606 Chicago Loop (The Loop) neighborhood, Loop neighborhood, New Eastside neighborhood, River North neighborhood, West Loop neighborhood

-60601 Chicago Loop (The Loop) neighborhood, Loop neighborhood, New Eastside neighborhood

-60661 Greektown neighborhood, Near West Side neighborhood, West Loop neighborhood

-60654 River North, Fulton River District

-60607 Fulton Market neighborhood, Greektown neighborhood, Little Italy neighborhood, Near West Side neighborhood, Printer's Row (Printers Row) neighborhood, University Village neighborhood, West Loop neighborhood

-60604 Chicago Loop (The Loop) neighborhood, Loop neighborhood

-60611 Gold Coast neighborhood, Magnificent Mile (Michigan Avenue) neighborhood, Near North Side neighborhood, River East neighborhood, Streeterville neighborhood

-60657 Lakeview (Wrigleyville) neighborhood, Lakeview East (East Lakeview) neighborhood, Northalsted (Boys Town) neighborhood, Roscoe Village neighborhood

-60605 Loop neighborhood, Near South Side neighborhood, Printer's Row (Printers Row) neighborhood, South Loop neighborhood

-60602 Chicago Loop (The Loop) neighborhood, Loop neighborhood

-60642 Goose Island, Noble Square, River West

-60614 Bucktown neighborhood, Depaul neighborhood, Lincoln Park neighborhood

-60613 Lakeview (Wrigleyville) neighborhood, North Center neighborhood, Northalsted (Boys Town) neighborhood, Uptown neighborhood

3. The areas with a population decline, are: 

-60609 Armour Square neighborhood, Bridgeport neighborhood, Canaryville neighborhood, Fuller Park neighborhood, Gage Park neighborhood, Grand Boulevard neighborhood, McKinley Park neighborhood, New City (Back of the Yards) neighborhood

-60628 Pullman neighborhood, Riverdale neighborhood, Roseland neighborhood, Washington Heights neighborhood, West Pullman neighborhood

-60649 South Shore neighborhood, Woodlawn neighborhood

-60608 Bridgeport neighborhood, Lawndale neighborhood, Lower West Side (Pilsen) neighborhood, McKinley Park neighborhood, Medical Village neighborhood, North Lawndale neighborhood, South Lawndale (Little Village) neighborhood, Tri-taylor neighborhood, University Village neighborhood

-60651 Austin neighborhood, Humboldt Park neighborhood

-60623 Lawndale neighborhood, North Lawndale neighborhood, South Lawndale (Little Village) neighborhood

-60656 Norwood Park neighborhood, O'Hare neighborhood

-60641 Avondale Neighborhood, Belmont Cragin neighborhood, Cragin (Belmont Cragin) neighborhood, Hermosa neighborhood, Irving Park neighborhood, Portage Park neighborhood

-60660 Andersonville neighborhood, Edgewater neighborhood

-60626 Rogers Park neighborhood

-60804 Clyde neighborhood, Lawndale neighborhood

-60805 Evergreen Park

4. Now outside of the fact that they have a population decline, these areas seem like they would otherwise be a great market:

-60656 Norwood Park neighborhood, O'Hare neighborhood

-60641 Avondale Neighborhood, Belmont Cragin neighborhood, Cragin (Belmont Cragin) neighborhood, Hermosa neighborhood, Irving Park neighborhood, Portage Park neighborhood

-60804 Clyde neighborhood, Lawndale neighborhood

-60805 Evergreen Park (outside of Norridge, this zip code has the safest ranking for violent crime: 24.40)

5. The areas with a higher than average crime ranking (based on the Chicago average of 56.87) are:

-60615 Grand Boulevard neighborhood, Hyde Park neighborhood, Kenwood neighborhood, Washington Park neighborhood

-60629 Clearing neighborhood, Gage Park neighborhood, Marquette Park (Chicago Lawn) neighborhood, West Elsdon neighborhood, West Lawn neighborhood

-60639 Austin neighborhood, Belmont Cragin neighborhood, Cragin (Belmont Cragin) neighborhood, Galewood neighborhood, Hermosa neighborhood, Humboldt Park neighborhood

-60632 Archer Heights neighborhood, Brighton Park neighborhood, Gage Park neighborhood, Garfield Ridge neighborhood, Lawndale neighborhood, South Lawndale (Little Village) neighborhood, West Elsdon neighborhood

-60647 Bucktown Neighborhood, Humboldt Park neighborhood, Logan Square neighborhood, West Park neighborhood, West Town neighborhood, Wicker Park neighborhood

-60644 Austin neighborhood, Madison Square neighborhood

-60624 East Garfield Park neighborhood, Humboldt Park neighborhood, North Lawndale neighborhood, West Garfield Park neighborhood

-60619 Avalon Park neighborhood, Burnside neighborhood, Chatham neighborhood, Greater Grand Crossing neighborhood, Pill Hill (Calumet Heights) neighborhood, Roseland neighborhood, South Shore neighborhood

-60633 Hegewisch neighborhood, South Deering neighborhood

-60622 Bucktown neighborhood, Goose Island neighborhood, Near North Side neighborhood, Noble Square neighborhood, River West neighborhood, Ukrainian Village neighborhood, West Park neighborhood, West Town neighborhood, Wicker Park neighborhood

-60643 Beverly neighborhood, Brainerd neighborhood, Morgan Park neighborhood, Washington Heights neighborhood, West Pullman neighborhood

-60637 Greater Grand Crossing neighborhood, Hyde Park neighborhood, South Shore neighborhood, Washington Park neighborhood, Woodlawn neighborhood

-60827 Fay's Point neighborhood, Riverdale neighborhood

-60617 Avalon Park neighborhood, East Side neighborhood, Hegewisch neighborhood, Jeffery Manor neighborhood, Pill Hill (Calumet Heights) neighborhood, South Chicago neighborhood, South Deering neighborhood

-60640 Andersonville neighborhood, Edgewater neighborhood, Lincoln Square neighborhood, Ravenswood neighborhood, Uptown neighborhood

-60620 Ashburn neighborhood, Auburn Gresham neighborhood, Beverly neighborhood, Brainerd neighborhood, Chatham neighborhood, Greater Grand Crossing neighborhood, Roseland neighborhood, Washington Heights neighborhood

-60610 Cabrini-Green (Cabrini Green) neighborhood, Gold Coast neighborhood, Goose Island neighborhood, Magnificent Mile (Michigan Avenue) neighborhood, Near North Side neighborhood, New Eastside neighborhood, Noble Square neighborhood, Old Town neighborhood, River North neighborhood, River West neighborhood, Ukrainian Village neighborhood

-60612 East Garfield Park neighborhood, Humboldt Park neighborhood, Medical Village neighborhood, Near West Side neighborhood, Tri-taylor neighborhood, Ukrainian Village neighborhood, University Village neighborhood, West Town neighborhood

-60659 Lincoln Square neighborhood, North Park neighborhood, West Ridge (West Rogers Park) neighborhood

-60653 Bronzeville neighborhood, Douglas neighborhood, Grand Boulevard neighborhood, Kenwood neighborhood, Oakland neighborhood

-60616 Armour Square neighborhood, Bridgeport neighborhood, Chinatown neighborhood, Douglas neighborhood, Lower West Side (Pilsen) neighborhood, Near South Side neighborhood, South Loop neighborhood

-60621 Englewood neighborhood, Greater Grand Crossing neighborhood, Washington Park neighborhood

-60636 Gage Park neighborhood, Marquette Park (Chicago Lawn) neighborhood, West Englewood neighborhood

6. Areas that are somewhat known as strong markets to invest in, and have the data to back it up are as follows (but still might be more on the pricy side):

-60645 Rogers Park neighborhood, Rogers Park neighborhood, West Ridge (West Rogers Park) neighborhood

-60630 Albany Park neighborhood, Irving Park neighborhood, Jefferson Park neighborhood, North Park neighborhood, Portage Park neighborhood, Sauganash neighborhood

-60618 Avondale Neighborhood, Irving Park neighborhood, North Center neighborhood ,Roscoe Village neighborhood

-60625 Albany Park neighborhood, Lincoln Square neighborhood, North Park neighborhood, Ravenswood neighborhood

7. The Areas that stood out to me (primarily because they at least at SOME level of growth and were lower than the Chicago average for violent crime) are:

-60638 Clearing neighborhood

-60652 Ashburn neighborhood, Scottsdale neighborhood, West Lawn neighborhood

-60646 Forest Glen neighborhood, Jefferson Park neighborhood, North Park neighborhood, Norwood Park neighborhood, Sauganash neighborhood

-60706 Norridge, Harwood Heights

-60655 Beverly neighborhood, Morgan Park neighborhood, Mount Greenwood neighborhood

-60634 Belmont Cragin neighborhood, Cragin (Belmont Cragin) neighborhood, Dunning neighborhood, Montclare neighborhood, O'Hare neighborhood, Portage Park neighborhood

-60707 Belmont Cragin neighborhood, Conti Circle (Conti) neighborhood, Cragin (Belmont Cragin) neighborhood, Galewood neighborhood, Montclare neighborhood

-60803 Howes Landing Boat Launch neighborhood, Laramie Square neighborhood, Navajo Hills neighborhood

Now I have no idea where these fall in terms of price or cap rates, but they are all neighborhoods that had decent to good growth and were (again) lower than the Chicago average for violent crime (still all over the national average) AND they are all neighbors I haven't heard much about around real estate circles. 

8. Some Other Things That Jump Out: 

1. -60636 Gage Park neighborhood, Marquette Park (Chicago Lawn) neighborhood, West Englewood neighborhood

-60621 Englewood neighborhood, Greater Grand Crossing neighborhood, Washington Park neighborhood

-60653 Bronzeville neighborhood, Douglas neighborhood, Grand Boulevard neighborhood, Kenwood neighborhood, Oakland neighborhood

-60616 Armour Square neighborhood, Bridgeport neighborhood, Chinatown neighborhood, Douglas neighborhood, Lower West Side (Pilsen) neighborhood, Near South Side neighborhood, South Loop neighborhood

-60653 Bronzeville neighborhood, Douglas neighborhood, Grand Boulevard neighborhood, Kenwood neighborhood, Oakland neighborhood

-60659 Lincoln Square neighborhood, North Park neighborhood, West Ridge (West Rogers Park) neighborhood

-60612 East Garfield Park neighborhood, Humboldt Park neighborhood, Medical Village neighborhood, Near West Side neighborhood, Tri-taylor neighborhood, Ukrainian Village neighborhood, University Village neighborhood, West Town neighborhood

These have some of the higher ratings for violent crime BUT they also have some of the higher population growth percentages.

2.The Future Projected Job Growth for EVERY zip code was LOWER than the national average. The national average for Future Projected Job Growth according to BestPlaces is 35.4 and all the zip codes where around 25.70 percent. 

The best was:

60707 Belmont Cragin neighborhood, Conti Circle (Conti) neighborhood, Cragin (Belmont Cragin) neighborhood, Galewood neighborhood, Montclare neighborhood and it ranked 26.10. 

3. Job Growth Over the Last Year was all at a negative 0.2% (though it's possible this was just an average for the city as a whole). 

4. In terms of Home Values, I won't bother going here because everywhere except certain areas with population decline and high crime are going up. 


----

SUMMARY:

-Chicago has some of the highest property taxes in the nation

-Chicago has some of the worst crime in the nation

-Chicago has tenant-friendly laws

-Chicago faces extreme political and financial issues related to the state pension 

-Chicago as a whole is at a population decline (though some specifc zip codes are growing like CRAZY - primarily around the Loop)

-Chicago as a whole is at a job growth decline

-Chicago has a lower than average Future Projected Job Growth

I HATE that this is the case!

All this said, if I were to buy in Chicago, I'd personally be looking at:

-60638 Clearing neighborhood

-60652 Ashburn neighborhood, Scottsdale neighborhood, West Lawn neighborhood

-60646 Forest Glen neighborhood, Jefferson Park neighborhood, North Park neighborhood, Norwood Park neighborhood, Sauganash neighborhood

-60706 Norridge, Harwood Heights

-60655 Beverly neighborhood, Morgan Park neighborhood, Mount Greenwood neighborhood

So there you guys go - hope you find it helpful!

Your metrics are a perfect example of the inaccuracy of statistical data based upon zip codes in dense urban areas. For example, a couple areas I work in as a broker, property manager, and contractor:

60623: North and South Lawndale are NOTHING alike, apples and steaks comparison. The demographic is completely different, and there are physical barriers (mainly the BNSF elevated train tracks) separating the neighborhoods. BTW - I see you also noted the "Lawndale neighborhood" as located in 60608, which actually does include a sliver of Douglas Park and Little Village, however those are FAR FAR differentiated from the majority of 60608 which is Pilsen - a neighborhood which substantially skews your averages upward in value potential and downward in crime.

60632:  Lumping 53rd/Kolin with 36th/California couldn't be further from anything remotely accurate.

60612: Rough parts of Garfield Park coupled with Tri-Taylor...oh man.

@Matthew Olszak you make a good point, there wasn’t a very easy way to gather data on a neighborhood by neighborhood level.

All that said though... I still don’t think it changes the conclusion - the outcome of the data, regardless of the inaccuracies that come from approaching the City on a ZIP code basis, still shows that Chicago is not the best place to invest in right now.

Again - I’m planing on buying here and doing my life here, but the trends of the data don’t show good signs.

then don't invest here.  You seem to be talking yourself out of it every chance you get

I find it funny when people try so hard to prove the third biggest US market isn't a good place to invest.

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