Is Chicago worth investing in ?

Question

I'm looking at the property taxes, and laws favoring the tenants, as well as the current state of the economy and I'm second guessing if Chicago is still a smart area to invest in. Im wondering if I'd have better luck making more money off of multi family elsewhere.

can anyone tell me what markets they'd recommend for house hacking/ multi family and if Chicago is still a good choice?

id prefer to stay in Illinois only because it's my home state. But I'm willing to look elsewhere too if it means I can get to quicker cash flow.

thank you!

Aaron Zimmerman · Answer

Chicago is absolutely worth investing in. The local laws are CRUCIAL to understand. If you're investing here from out of state, I'd be looking to hire a property manager.

if you do look into Chicago, you'll probably want to stick to A & B areas. C areas do not have quite the same appreciation potential and there's often more headaches.

Crystal Smith · Answer

The mulitfamily stock in Chicago property is plentiful.  Where to house hack depends on your price point & what kind of neighborhood your personally want to live in.  I recommend focusing on acquistions near any of the major universities,UIC, IIT, Northwestern, Loyola or DePaul.  Multiple strategies can be deployed around universties.  I would also consider around the Illinois & Chicago Medical districts.

I would also consider the following areas East Garfield, Bronzveille, Humbold Park & Austin (As close to Oak Park as possible).  Lots of development on going in these neighborhoods.

Steve K. · Answer

I don't the area well, but well enough to know that "Chicago" is too general of a search area to get anything other than general advice about. I'm sure there are parts of Chicago that are worth investing in and other parts that aren't. You have to drill down to individual neighborhoods, and learn them block by block or even better house by house to know which exact locations are good to invest in and which aren't.

Paul De Luca · Answer

@Madi Shanahan

Despite some of the challenges associated with investing in Chicago, many people have been able to do it successfully.

It's not a matter of luck but having an understanding of the local laws, neighborhoods, and connecting with the right people (building your team) to leverage their expertise.

Since you currently live in Illinois, and unless you work remotely & can easily relocate, it's probably best to keep searching for a decent property to house hack to take advantage of owner occupant financing.

Eudith Vacio · Answer

Hey Madi 👋🏽 great question — I get this one a lot!

You can absolutely find both appreciation and cash flow in Chicago. The key is really knowing your sub-markets and staying up to date on local regulations. Chicago’s landlord-tenant laws do tend to favor tenants, so it’s super important to familiarize yourself with the Residential Landlord and Tenant Ordinance (RTLO) — that’s the best resource for understanding your rights and responsibilities before you buy.

That said, I’m also licensed in Northwest Indiana (Hammond, East Chicago, and Gary), and while I live and invest in Chicago, I’ll be the first to say that Northwest Indiana is another great area to consider. Lower taxes, more landlord-friendly laws, and plenty of value-add opportunities.

Both markets can work really well — it just depends on your personal preference and what kind of investing style fits you best.

Daniel Bourdeau · Answer

Hey Madi!

I think it all really depends on your goals. I personally house hack in Chicago with an airbnb in half my property, and its able to pay for almost my entire mortgage.

You need to be realistic about numbers. House hacking with a long term rental in the other units is no longer going to allow you to break even on the mortgage or really be much different than renting - other than appreciation gain in the property. Chicago is one of the places left that is still appreciating due to our low inventory situation.Otherwise feel free to reach out to me and I'd love to discuss.

Marcus Auerbach · Answer

I would say so. The data is from RentCafe, you can look uo the newest report. The Midwest is going to strategically matter more in the future and population will be growing due to fresh water and cooler climate, also fewer storms (lower insurance premiums). Use your home field advantage, it's worth at least 20% - even going to Milwaukee (which is a slightly better market) makes you an OOS investor and that more than eats up the small benefit.

Kenneth Garrett · Answer

I have invested in the suburbs outside of Chicago and it has been a great experience.  I stay out of Chicago for many reasons that there are just too many rules, fines and tenant favoritism with the city.

Best of Luck.

Jonathan Klemm · Answer

Very good question @Madi Shanahan - I absolutely love Chicago for house hacking.  If you can live in a nice neighborhood and pay less rent than you normally would by house hacking - it's a win.

Naturally, those solid nw neighborhoods will continue to grow in value!

Where are you living right now?  Any specific neighborhoods you'd like to live in?

Henry Lazerow · Answer

Chicago is great as long as you stay in the good areas. My rogers park 4 unit has not had a single late payment in 8 years and rents have gone up $60-120 every year. The buy in cap rates are low but the growth and high quality tenants who can handle rent increases each year makes these cashflow high in the future. The lower class parts of city are extremely risky, these are the areas you can have tenant issues where the chicago tenant friendly laws can bite you. Crazy stuff like 8 month eviction, etc. Not for me but some do succeed at those areas. I flipped a place in one of those areas and last I heard from buyer they were having issues with a tenant breaking lease rules. On the north side there is so many qualified applicants you never even need to take a risk with someone who may have problems.

Is Chicago worth investing in ?

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