Looking for feedback on Chicago market for multifamily CRE

[Tri Ly]

I'm looking for my first investment property in Chicago markets. I'm interested in higher-than-average income neighborhood, even better with upside possibility (gentrifying). I'm mostly looking at urban, smaller size (6-10 units) that are in good neighborhoods. I see a lot of those in Chicago neighborhoods around downtown and NW of downtown.

Any brokers from these areas that I can pick your brains? My questions are:

1. What is the trending CAP rates on these market these days? I would prefer positive leverage (6-8%)
2. Potential for appreciation? My understanding is that Chicago is more cashflow play
3. Rental market / local economy prediction?
4. Any upcoming property tax or regulation that I should be aware of?

Are there other Midwest markets that could fit into these criteria? Thank you so much in advance.

[Crystal Smith]

Quote from @Tri Ly:

I'm looking for my first investment property in Chicago markets. I'm interested in higher-than-average income neighborhood, even better with upside possibility (gentrifying). I'm mostly looking at urban, smaller size (6-10 units) that are in good neighborhoods. I see a lot of those in Chicago neighborhoods around downtown and NW of downtown.

Any brokers from these areas that I can pick your brains? My questions are:

1. What is the trending CAP rates on these market these days? I would prefer positive leverage (6-8%)
2. Potential for appreciation? My understanding is that Chicago is more cashflow play
3. Rental market / local economy prediction?
4. Any upcoming property tax or regulation that I should be aware of?

Are there other Midwest markets that could fit into these criteria? Thank you so much in advance.

First thing- Chicago the city has 78 neighborhoods, so you have to be more specific with your questions. At a macro level Chicago's CAP Rate is around 6%. I'm not sure what you consider a good neighborhood but I can imagine & in those neighborhoods the CAP Rates are going to be 4 to 5% or less.

IMO the potential for appreciation lies in some of the neighborhoods which you may not consider good.  But they are the neighborhoods that are in the same position today as the good neighborhoods were 10+ years ago. Transitioning/gentrifying.  

Regarding the rental market- As with the sales market, there's downward pressure on rents, but people and businesses still need someplace to live and conduct business so there are always opportunities.

Regarding property tax or regulations- Again hard to answer at a macro level.  Easier to address at a neighborhood level.  

Other Midwest Markets you should consider- Milwaukee, Indianapolis & Columbus