Chicago cap rates South Shore neighborhood

[Brent Mattison]

I was wondering what the going cap rate is in the South Shore area. I have been looking at 6 unit buildings with 2 bedrooms and 1 bath.

[Mark Killion]

I just did a quick analysis of closed transactions for South Shore Chicago.

I focused on Multi-Family Apartment Buildings only.

This was for sales that took place in 2016.

About 20 transactions closed on the MLS this year.

The estimated median Cap Rate was 10.9%

I estimated the Cap Rate by looking at the Gross Income.

I then assumed 50% expenses to get the Net Income.

I like doing this because some sellers may play with the expenses

to make them look lower than they really are.

Many feel that the 50% rule is a pretty good estimate of expenses.

Then I divided the estimated Net Income by the Selling price.

I arrived at a median Cap Rate of 10.9%.

So this should give you a good idea of where Cap Rates are in the

South Shore neighborhood.