Is the Chicago Market a dead-end, is it a bust for home purchase?

Question

Really how bad is it in Chicago to invest now.  I see Texas, Colorado, Tennessee, Denver, even Indian but I dont see a lot about Chicago IL investor making investment.  Is the market that sewed up that investor don't bother. Is it too much red tap...Why is the trend in Chicago?  Am I looking in the wrong place for investors?

Aaron Zimmerman · Answer

Here's my tips for investing in Chicago.

1. Know the landlord tenant rules. The chicago RLTO is a good place to start if investing in Chicago. If you know the rules and follow them, you'll be fine.

2. Know the neighborhoods. There's 77 neighborhoods in Chicago. If you're planning on visiting Chicago, make a point to go to as many neighborhoods as you can and that you feel safe.

3. It's a great market for finding small multi-family and therefore house hacking. Approximately 25% of our housing inventory is 2-4 units, which is perfect for a low down payment loan.

4. Like any bigger city, cash flow will be hard to find in the best areas.

5. There are a lot of amazing professionals that you can build here with including those on this thread.

6. Listen to the Straight Up Chicago Investor Podcast. It's a wealth of knowledge and there are some amazing people to learn and grow from.

Hope this helps and good luck should you invest in Chicago. Happy to be a resource.

Jonathan Klemm · Answer

Hey @Carolyn Bernicky - I still love Chicago to invest in right and probably now more than ever.

My philosophy has and always will be Warren Buffet's "Be greedy when others are fearful, and fearful when others are greedy".

Chicago has tons of old inventory that needs to be rehabbed and price points at every level.

I'd be happy to connect to see how we might be able to help, review your strategy, or just talk about Chicago real estate.

John Warren · Answer

@Carolyn Bernicky Chicago is a great market in a lot of ways. Lots of great apartment building inventory, primary market, easy to get lending, etc. The hard part is there is a bit more red tape, but for those of us able to operate here it is a very profitable place to do business. I would focus on your team primarily. If you are going to invest here make sure your PM is ready to assist if you are out of state.

Andy Smith · Answer

Hey @Carolyn Bernicky, I'm a lender in Chicago and we're still doing a ton of work with investors. Let me know if you'd like me to price anything out for you so you can see up to date numbers.

Zachary Inman · Answer

From other investors i've spoken to, there are a lot more hoops to jump through and good deals are tougher to come by. But, you have a huge tenet pool and steady growth if you're able to break in.

Henry Lazerow · Answer

I have a 4 unit in rogers park neighborhood of chicago rents have gone up steady $75-100 a unit per year and the tenants have all been amazing never had to even give a late fee.

Investor activity has slowed with rates up but a year or so ago about 1/3rd of my clients were buying from out of state. Chicago is one of few markets where we have a decent cap rate in good north side areas (its not high like a lower growth small town but is higher then comparable cities nice neighborhoods).

Areas like Avondale, west logan square, albany park and rogers park are seeing rapid gentrification so thats where I typically push investors who are interested in Chicago. I think they will be the most profitable total return areas over next 5-10 years.

Carolyn Bernicky · Answer

Thanks sounds good, I looking to move my prospecting out of Chicago seems to be slowing.

Carolyn Bernicky · Answer

Thank you for the input it explains a lot.  I need to venture out as I suspected but still learning as I go...looking to get into the San Diego and or Phoenix market as those are my next locations to move into literally.

Edgar Barbosa · Answer

@Carolyn Bernicky I think this depends on who you ask. I'm sure depending on your strategy Chicago is a very well rounded market to be profitable. Some have their biases and others just flat out don't like the policies and regulations. However, I know many people that have had much success in Chicago and surrounding suburbs, and continue to do so. It's the Midwest hub. It helps to have in depth knowledge of the city, but with the right team you'll be set up for success.

Is the Chicago Market a dead-end, is it a bust for home purchase?

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