Understanding LTR in North Chicago

Understanding LTR in North Chicago

Member since 2023 · 54 posts · 14 votes

Through deal review and market research, I'm starting to narrow in on North Chicago (Lincoln Square, Lake View, Roscoe Village, Albany Park, North Center, Uptown, Andersonville, etc.) as an area to invest in LTR, given the great schools and amenities like parks, access to downtown, etc. Generally speaking, what do renters expect in this area? Do they expect that the landlord pays water, utilities, gas, etc.? Is that negotiated? Is it typical for LTRs to do x months locked in then month-to-month? Or month-to-month off the top? 

In general I'm noticing some great light rehab duplexes and triplexes in the area (less targeted to families, more for younger professionals) as well as SFRs geared toward families given the proximity to excellent schools in the area. If any existing investors can share their insights on what renters expect in the area, that would be great.

2Reply
59 views

Most Popular Reply

Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes
3y

@Raj A.

Most of the time the landlord pays the water bill at any 2-4 unit building and what utilities the tenant pays depends on the building although it's standard for the tenant to pay for their own electric. It's also common for tenants to also pay for gas but if there's only one gas meter at the building then the landlord is paying for that. It is not normally negotiated but dictated by the number of electric & gas meters at the building.

I think most landlords do 1 year leases which sometimes do automatically renew on a MTM basis but it's best practice to sign a renewal. MTM leases are common in Chicagoland though. If the leases are MTM, which tends to mean there are no written leases, be sure to ask for signed tenant estoppel letters so you know the basic terms of their tenancy.

See this reply in the discussion

10 Replies

Jump to latestLatest
  • Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes
    3y

    @Raj A.

    Most of the time the landlord pays the water bill at any 2-4 unit building and what utilities the tenant pays depends on the building although it's standard for the tenant to pay for their own electric. It's also common for tenants to also pay for gas but if there's only one gas meter at the building then the landlord is paying for that. It is not normally negotiated but dictated by the number of electric & gas meters at the building.

    I think most landlords do 1 year leases which sometimes do automatically renew on a MTM basis but it's best practice to sign a renewal. MTM leases are common in Chicagoland though. If the leases are MTM, which tends to mean there are no written leases, be sure to ask for signed tenant estoppel letters so you know the basic terms of their tenancy.

  • Member since 2023 · 54 posts · 14 votes
    3y

    Useful Paul; thanks for this. And definitely makes sense regarding 1 meter vs. meters-per-unit. Even in a month-to-month situation I would be looking for something signed and I don't believe that should be a problem based on what I'm reading on the forums here and elsewhere.

  • Jonathan KlemmBusiness Member
    Moderator
    Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
    3y

    Hi there @Raj A. - First off I love those Chicago neighbors on your list!  Those will be long-term amazing plays!  

    A good person to connect with would be @Henry Lazerow, he's a realtor and has rentals up in that area.  He will be able to tell you exactly what tenants are expecting.

    I'd also just recommend checking out other listings their price points and the terms of the rentals.

    If you end up doing something that needs some rehab we should definitely talk more...

  • Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
    3y

    @Raj A. happy to help feel free to shoot me a PM with any questions. In general though in these areas landlord pays water and tenant pays everything else. Most of my clients do 12 month leases. There is a ton of demand in these areas and you will have multiple good tenants willing to do 12 month leases. At end of 12 month lease you raise the rent each year or tenant moves out I have not seen anyone do month to month. The schools do not really matter it's going to be 20-30 year olds with 700 credit scores great tenants in these neighborhoods for the most parts as your renters. If do single family might get some families but those will be hard to make any cash flow, 3 or 4 unit buildings is the best. 

  • Member since 2023 · 54 posts · 14 votes
    3y

    Thank you both for the detail and makes sense. To your point Henry I think for these duplexes and some triplexes given the area it makes much more sense to target a younger professional than a family. So will need to adjust our initial strategy a bit as initially we were thinking of targeting young families. Will definitely reach out when the time is right. 

  • Member since 2023 · 54 posts · 14 votes
    3y

    @Henry Lazerow @Jonathan Klemm Do you all have any experience with investments and/or projects in Woodlawn, Near South Side, South Commons, Douglas and/or Bronzeville? I'm also noticing great potential multi-family opportunities in those areas (notably, running analysis using a younger tenant or a tenant that isn't a family to see how the numbers would work). While I can see there is definitely more crime in general than some of the previous areas I listed up in North Chicago, I'm also reading a ton about how the area is vibrant, lots of young professionals, good access on the L via the Green line up to downtown, etc. So, curious if you all have experience or have advised clients in those areas, and your general thoughts.

  • Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
    3y

    Are you local? Go drive the areas. Bronzeville will get great tenants and you can still make some cashflow on the 3/4 unit buildings so if cashflow a goal would definitely focus there! The other areas will be riskier tenants. In the rougher south side areas you need to factor in high turnover costs (tenants beat it up often 2-5k to turnover a unit and some vacancy time while repairing).

    Northside tenants are a lot better. I have almost 100% occupancy on my 4 unit in rogers park over 4 years only 1 month vacant for 1 unit. Rents have gone up about 10-15% a year over last 4 years as area gentrifies. Other gentrifying north side areas are Albany Park, Irving Park, West Avondale, North Humboldt Park.

  • Member since 2023 · 54 posts · 14 votes
    3y

    Unfortunately I'm not local but plan on visiting a friend later this year, and will definitely drive around. Useful to know about the North side too, and tracks with what friends who live in and around Chicago have been saying as well. 

  • Jonathan KlemmBusiness Member
    Moderator
    Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
    3y

    @Raj A. - We have definitely done rehabs and purchased properties in those Chicago neighborhoods you've mentioned.  I personally prefer those areas over the north side neighborhoods at this point.  

    In my opinion, the upside is much higher and there is more inventory where the numbers work much better...

  • Member since 2023 · 54 posts · 14 votes
    3y
    Quote from @Jonathan Klemm:

    @Raj A. - We have definitely done rehabs and purchased properties in those Chicago neighborhoods you've mentioned.  I personally prefer those areas over the north side neighborhoods at this point.  

    In my opinion, the upside is much higher and there is more inventory where the numbers work much better...

    Thanks Jonathan; in that sense though, you're mostly looking at fix and flip vs buy and hold (I.e. generating your return from the sale of the property vs. long term cash flow) correct? Just want to be sure I'm thinking about the right strategy for the right areas. Even better if you know of or are currently a long term buy and hold investor in those areas (and would be happy to chat on the phone with anyone too).
Join the conversationCreate a free account to reply, vote on answers and follow this thread.