What are the best neighborhoods to househack in Chicago?

31 Replies

I am interested in buying a 2 flat/3 flat in Chicago, and I'd like to house hack the property. I'm new to Real Estate, and I don't really know where to begin looking. Any suggestions on which neighborhoods have a lot of 2 flat/3 flats available?

Originally posted by @Jake Shulman :

I am interested in buying a 2 flat/3 flat in Chicago, and I'd like to house hack the property. I'm new to Real Estate, and I don't really know where to begin looking. Any suggestions on which neighborhoods have a lot of 2 flat/3 flats available?

What's your budget? Do you the property to cash flow while living there or just break even, then cash flow when you move? Do you want a neighborhood to hang out in or are you only intersted in the 2/3 flat for business purposes. Chicago has 78 neighborhoods so the first thing you need to get a handle on is how much you will get qualified for then determine the answers to the other questions I posed. 

 

@Jake Shulman

There are many 2-3 flats throughout Chicago's neighborhoods but it mostly comes down to (a) where are you comfortable living and (b) your expectation for cash flow or mitigating your housing expense. Many house hackers end up on the NW side in Belmont Cragin, Hermosa, Logan Square, Avondale, Portage Park, Irving Park, etc. There are some decent options for multi-family in the western suburbs of Cook County too.

Originally posted by @Jake Shulman :

Awesome thank you

A lot depends on your budget and loan program, that will really dictate where you can buy.  I am happy to send you some examples.

It also depends on your priorities.  Imagine you have a pie, you can cut 4 pieces; price, condition, cash flow, location.  So if location is the biggest piece of your pie the others need to be smaller.  Everyone has different priorities, and you can't have them all.  So you will need to sacrifice on at least one of them to get what you want.

 

As Brie mentioned its going to largely depend on your budget. My personal favorites are Albany Park (getting crazy appreciation as the area goes from low income to trendy rich millenials moving in), McKinley Park/Bridgeport/Brighton Park these are nice options if lower budget or cashflow is main goal. Then there is Avondale/Logan Square/Irving Park which can be nice house hacks but has gotten pricier. If OK with a legal 2 + an illegal unit then Logan Square still easy to make work but for legal units unless can afford a 4 unit it's harder to make 3's work. 

My method is to always run the numbers as if you don't live there, then account for the unit you occupy as a personal expense. 

A 3 unit for $500k in X, Y, or Z neighborhood with units setup as a 3/2, a 2/1, and 1/1, that rent for $2,000, $1,500, and $1,000, respectively. Is it a good deal? It's a good deal if you occupy the 1/1 for $1,000 yet not a good deal if you occupy the 3/2 for $2,000...? It doesn't make sense to analyze that way. The rent is your personal expense. 

I agree with the neighborhoods already listed here. One thing I'd add is to find a great lender that can walk you through the different loan programs and where they apply. Once you have those, just start punching your pre-approval numbers into an MLS aggregator real estate site/app, select multi-family, and see where options pop up and drill down into the areas to see which ones you'd like to live in.

@Jake Shulman

As @Brie Schmidt mentioned Chicago is a very large area. You need to think about breaking down some of your criteria. 

1. Location

2. Budget

3. Type Of Neighborhood (A,B, C) I would avoid a D area. (Also do you want to be with in City of Chicago or suburbs)

4. 2 - 4 Flat This will depend on your budget & Location

5. What is your expectation in terms of Cash Flow/Equity In the Property? (Are you ok just breaking even or do you want to have cash flow while you live in the property)

6. How much work are you willing to do & Is that something realistic for you. That will depend on the condition of the property you can buy. 

This is a lot to think about but if you are going to buy and house hack might as well put some work in on the front end. So you can end up with a good outcome that will yield dividends for years to come. 

The question you asked is a good one but very broad. 

Start with Area Selection first and if you want the numbers to work you will have to look at B or C areas. A areas are very hot and cash flow will be very tight. Also depends on the condition of the property and if you have the willingness and ability to identify off market deals vs. MLS. MLS is very tight. Not that things don't come up but then you have to be ready to jump.

@Jake Shulman

In reality there are 2/3 flats in every neighborhood of Chicago, except that in the more established and trendy neighborhoods most of these have already been turned into condos or giant single family homes, so the remaining stock is very limited. You will want to look at neighborhoods adjacent to the most popular ones to find better deals. Apart from the ones mentioned I also have properties in Pilsen and Little Village, which have a lot of 3-4 unit housing stock.

People in this thread are right to say that a lot depends on your budget and the lifestyle you intend to persue. If you just want to reduce your rent payments and have someone else help you pay off your mortgage you can look just about anywhere. If you want to live rent free and cash flow at the same time you will need to get more creative and look for properties off the beaten path.

@Jake Shulman you have a lot of heavy hitters who have already responded here with great advice. Chicago is literally covered with 2 and 3 unit properties, so I would start with where you want to live. Where is that? North side? South side? Suburbs? Generally speaking, you can find 2 and 3 units everywhere that was built up from the late 1800's up through the 1960's. Once you go west of 294 or north up to the north shore it gets hard to find the inventory as the demand changed more to single family homes. 

@Jake Shulman - Tons of smart people above have given you some great advice.  Figure out your purchasing power and then you get can figure out which area fits your budget.

I'll throw out some the neighborhoods I like and that seem to be in the path of progress.  Bronzeville, Washington Park, Kenwood, Portage Park, Hermonsa, Albany Park.....Honestly anything along the blue and red lines will always be good long term

Hey Jake, It sounds like I'm in a similar boat as you. I've been looking at 2+ADUs in Avondale, Irving Park, Albany Park, and into Portage Park and Hermosa. More than happy to connect! 

Originally posted by @Jason Albasha :

My method is to always run the numbers as if you don't live there, then account for the unit you occupy as a personal expense. 

A 3 unit for $500k in X, Y, or Z neighborhood with units setup as a 3/2, a 2/1, and 1/1, that rent for $2,000, $1,500, and $1,000, respectively. Is it a good deal? It's a good deal if you occupy the 1/1 for $1,000 yet not a good deal if you occupy the 3/2 for $2,000...? It doesn't make sense to analyze that way. The rent is your personal expense. 

Thank you @Jason Albasha! Definitely agree with your thinking here!

 

Originally posted by @Andrew Holmes :

@Jake Shulman

As @Brie Schmidt mentioned Chicago is a very large area. You need to think about breaking down some of your criteria. 

1. Location

2. Budget

3. Type Of Neighborhood (A,B, C) I would avoid a D area. (Also do you want to be with in City of Chicago or suburbs)

4. 2 - 4 Flat This will depend on your budget & Location

5. What is your expectation in terms of Cash Flow/Equity In the Property? (Are you ok just breaking even or do you want to have cash flow while you live in the property)

6. How much work are you willing to do & Is that something realistic for you. That will depend on the condition of the property you can buy. 

This is a lot to think about but if you are going to buy and house hack might as well put some work in on the front end. So you can end up with a good outcome that will yield dividends for years to come. 

The question you asked is a good one but very broad. 

Start with Area Selection first and if you want the numbers to work you will have to look at B or C areas. A areas are very hot and cash flow will be very tight. Also depends on the condition of the property and if you have the willingness and ability to identify off market deals vs. MLS. MLS is very tight. Not that things don't come up but then you have to be ready to jump.

This is great, thanks Andrew!

Originally posted by @Ron S. :

I agree with the neighborhoods already listed here. One thing I'd add is to find a great lender that can walk you through the different loan programs and where they apply. Once you have those, just start punching your pre-approval numbers into an MLS aggregator real estate site/app, select multi-family, and see where options pop up and drill down into the areas to see which ones you'd like to live in.

Thanks for the advice, Ron! 

Originally posted by @Michael K. :

@Jake Shulman


In reality there are 2/3 flats in every neighborhood of Chicago, except that in the more established and trendy neighborhoods most of these have already been turned into condos or giant single family homes, so the remaining stock is very limited. You will want to look at neighborhoods adjacent to the most popular ones to find better deals. Apart from the ones mentioned I also have properties in Pilsen and Little Village, which have a lot of 3-4 unit housing stock.

People in this thread are right to say that a lot depends on your budget and the lifestyle you intend to persue. If you just want to reduce your rent payments and have someone else help you pay off your mortgage you can look just about anywhere. If you want to live rent free and cash flow at the same time you will need to get more creative and look for properties off the beaten path.

 Awesome, thanks for the input, Michael!

Originally posted by @John Warren :

@Jake Shulman you have a lot of heavy hitters who have already responded here with great advice. Chicago is literally covered with 2 and 3 unit properties, so I would start with where you want to live. Where is that? North side? South side? Suburbs? Generally speaking, you can find 2 and 3 units everywhere that was built up from the late 1800's up through the 1960's. Once you go west of 294 or north up to the north shore it gets hard to find the inventory as the demand changed more to single family homes. 

 Makes sense! Thanks John!

Originally posted by @Jonathan Klemm :

@Jake Shulman - Tons of smart people above have given you some great advice.  Figure out your purchasing power and then you get can figure out which area fits your budget.

I'll throw out some the neighborhoods I like and that seem to be in the path of progress.  Bronzeville, Washington Park, Kenwood, Portage Park, Hermonsa, Albany Park.....Honestly anything along the blue and red lines will always be good long term

Thanks, Jonathan!