Best Chicago Neighborhoods for Appreciation

[Jon Loca]

I'm a seasoned investor but new to the Chicago area. What neighborhoods do people believe will appreciate the fastest in the next 5 years?

[Russell Brazil]

@Brie Schmidt probably has some insight. 

[John Warren]

@Jon Loca welcome to Chicago! Most people are looking along the blue line, or southwest. You will hear a lot of the same neighborhoods over and over again (Humboldt Park, Hermosa, Belmont Craigin, Little Village by Marshall Square, McKinley Park). Most of the well established north side neighborhoods are priced out at this point unless you have a longer hold time on the horizon. 

[Man Le]

@Jon Loca I'm in the west suburds of Chicago, Aurora and been looking into expand my investment to multi family units in Chicago area, I found a series of youtube videos from Jake Lyon Realtor, he put together all the numbers for all the neighborhoods including South, West, North of Chicago, check it out.

I watched all of Jake's videos and avoided the south side of Chicago, they have all the neighbors listed as 15 most dangerous neighbohoods of Chicago, only selected West of Chicago like Austin, East Garfield Park to sample some data and all the numbers such as 1% rule, cap rate, avg 1 year growth rates matched Jake's numbers, all the numbers look good in terms of investment compared to other neighborhoods of Chicago, even in the west suburbs. 

I'm still looking into other data, have not decided if I should invest in those areas or not. 

[Jake Fugman]

@Jon Loca Welcome to the Chicago market! As you are likely aware there is always a sensitive balance between appreciation potential and ROI. Some of the highest crime areas in Chicago might have the best chance for appreciation since only a small value jump increases will look like heavy appreciation on paper (ex: $150k property going to $200k VS $500k property going to $550k). Same $50k increase but far different % gains.

I would focus what "balanced" areas with an average price of $150-200k per door are likely to see the biggest value gains.  These types of areas have the highest chance of becoming the next "trendy" spots to live or where families will settle long term. A few of them that come up (some already mentioned)... Heart of Italy, Little village, McKinley Park, Brighton Park, East Woodlawn, Portage Park have good balance at the moment that have room to grow IMO. 

[Jonathan Klemm]

@Jon Loca - There are so many neighbors in Chicago that are appreciating quickly.  Some of the areas you would least expect have appreciated the most over the last couple of years like Englewood, Garfield Park, Woodlawn, etc.  

We don't typically focus any long-term hold in those areas because we believe the highest appreciation long-term will be any neighborhoods alone the "L" routes, specifically the blue line which goes to O'hare and Greenline (Bronzeville, Washington park area).

Always happy to connect and discuss the hot neighborhoods more.  Feel free to reach out.

[Jon Loca]

Thank you all for response and information. I agree that appreciation alone isn't sufficient and I also invest for a health cash flow. Sounds like being close to a transit line is critical. 

[Henry Lazerow]

Albany Park is #1. Bridgeport/Mckinley Park, West Logan Square, Avondale, Irving Park all these ares should continue to get solid appreciation. Rents have been shooting up also and more A class tenants moving in, you can get the A class tenants if you have rehabbed units. Easy to do value adds as can push the rents up so high. Also like Brighton Park a lot and have already started to see some higher end single family builds popping up as it gentrifies! 

Austin and East Garfield Park "appreciated" crazy fast in 2004-2007 and then their value folded three times as fast as surrounding areas during the crash. Sales people hyped these areas up 20 years ago like they are doing again today. When I see the low cap rate sales in these areas it worries me we are at the top of a bubble haha 

[Jon Loca]

@Henry Lazerow Thank you Henry for your insight. Timing markets is difficult, I'm fearful in these times especially with interest rates rising. 

[Jay Garrison]

You hear the same neighborhoods ad nauseam: Little Village, Albany Park... and then someone chimes in with something they saw about avoiding "dangerous" areas based on some low-hanging fruit they came across online.  Much of the South Side is solid, but it's definitely not for parachute investing. That said, you don't need to split any atoms to do okay. 

A better way to approach Chicago is by starting with single blocks, or having a knowledge of the city's design - which actually takes some legwork and an appreciative eye. For example: Humboldt Park is big! Can you afford to be east of California, or should you stretch it back to Kedzie based on your budget? Maybe even Homan? 

East Garfield Park has a reputation as a "permanent" up and comer, but do you plan to Air BNB or just try the standard rental market? That makes a big difference. Are you on one of the one-way streets - Washington, Warren - where the housing stock seems to be a bit more charming? The area very close to the Garfield Park Conservatory is a gold mine, but I would definitely not lump it in with some of the blocks between Homan and Kedzie, from Lake Street down to the expressway.

If you get familiar with the Chicago Boulevard System, you'll know that there are stately homes along them... and that immediate areas near Douglas Park, Marshall Square, Columbus Park, and a few others are not the same as the neighborhoods that surround them. 

Buying near an L station is a good idea, but know your subway lines! The Green Line has a bit of new commercial activity around the shuttered Racine Station, and I wouldn't be surprised if that station is re-opened in the next 10 years. I love love love the area near the Halsted station, but would be reluctant to invest near Ashland, even though it's close to a major police station. The Morgan station transformed that little corner really quickly, and I wouldn't be surprised if there were 1 or 2 more stops added to the Green line in coming years. And so on.

Do your homework.