How is the situation in Chicago?
BROOKLYN, NY · Member since 2017 · 7 posts · 5 votes
How is the situation in Chicago?
Most Popular Reply
Developer · Chicago, IL · Member since 2016 · 82 posts · 88 votes
8yThis thread is a mess. You have people claiming that it's "redlining" to tell people that some parts of the city are rougher than others (hint redlining only pertains to lending, not the correct term here). Then you have some guy from Florida making the super in depth one sentence "don't go to Chicago, stay in NYC" comment despite the fact that he isn't in either place. None of these responses really add much to the conversation.
Chicago does have higher returns, that's for sure. That's just a function of land and buildings being abundant here. This city was built to grow to the size of NYC and had a peak population (in the city limits) of 3.8 million people. 2.6 million people now live in that area. Simply put there is a lot of supply. This also means there are a lot of not so great parts of the city where those 1.2 million people used to live and now moved out of leaving a bombed out shell of what once was. Those areas are, in fact, largely on the South and West sides of the city. Does that mean those areas are a terrible place to invest? No. There's a niche for everyone here and for some people that niche is grabbing properties for cheap in not so great areas and making a much higher return as a reward for that extra risk. There are also people who make money buying basically zero risk properties in super wealthy areas. It's all about understanding what risks you are taking and whether your investing style works with the areas and properties you are looking at.
It's important to note that Chicago is extremely block by block. So while people will make sweeping generalizations about the South side or the West side, there is actually extremely fine grained detail to that. Hyde Park is one of the nicest and hottest areas in Chicago and it's right in the middle of the South side, but within Hyde Park there are really nice areas where BAM you cross the street and it's very seedy. There are also really bad neighborhoods where you can find islands of super nice, clean, housing with very few criminal elements on the block. Sometimes there will be a whole pocket of a neighborhood where every block has a block club and they just don't let the crime or decay set in. Those can be great areas to invest if you can find and identify them.
At the end of the day the answer to the question of whether or not you should invest here is actually another question: Are you willing to put the time and effort in to get to know the markets you are considering on a fine grained enough scale to be able to invest with confidence that you know exactly what you are buying? You WILL get burned if you jump into Chicago and start buying willy nilly without even seeing the place. There are simply too many places that are challenging for an absentee landlord, too many bad property managers, or the off chance a drug dealer sets up shop in your building. But if you are willing to spend enough time here actually visiting the buildings and areas you are looking at and willing to get out of the car and walk some of these rough around the edges areas, you can and will do quite well.
My anecdotal example is a corner of a neighborhood on the SW side which is known for being pretty rough and gang infested. A few years ago I found out there were some serious big name companies making some flashy investments in one corner of the hood. I identified potential and got established along what is basically a 4 block by 10 block corridor following a beautiful commercial street and shadowing a L line. I now own dozens of units in that area and control a quarter block in one place. This has allowed me to further leverage those investments made by much larger players in the area by selectively targeting the few truly derelict properties in my corner of the neighborhood. I intentionally go after anything that is vacant or blighting the area. 95% of the properties are working class families keeping their homes well maintained, but there is a constant turnover of that other 5% that opens the door to me. I grab the properties holding the area down and thereby increase the values of the buildings I already hold in the immediate area by eliminating places that gangs or vagrants might set up shop in. This has compounded the big commercial investments I've mentioned which already caused an increased police and security presence. Now I am actually worried that other people are catching on to what I've been doing for 6 or 7 years now because I'm starting to see investors buying and turning over other less derelict properties in "MY" hood.
You don't have to go as all out as that, but opportunities like that exist here. In what other major city can you basically claim a little area as your own "sandbox" and start building your own little castle? Where else can you pick up units for $20k a piece on a block where you just had a six unit you rehabbed appraise for $1.1 million? Only in Chicago. We are just rebuilding from the second Great Chicago Fire, huge swaths of the city have been systematically devastated since WWII. After the first devastation of Chicago in 1871, the newsmen from Chicago were on the first train out the next morning to all corners of the United States on their way to proclaim "You will never have another opportunity in your life to make a fortune as you will in the rebuilding of Chicago". I'm very much saying the same here, the city has been destroyed again this time at the hands of man, not nature. But Chicago is a city that if only because of geography MUST EXIST. If you can find a way to invest wisely here, you will never see another opportunity to make a fortune like it anywhere else.
28 Replies
- Real Estate Broker · Chicago, IL · Member since 2017 · 96 posts · 69 votes8yGood morning Will- First off, I feel obligated as a born/raised city guy to state that no, you don’t sincerely know the issue with crime. The national media has completely exploited the city when in reality, it is simply a reflection of the southside. The north side of the city is in phenomenal shape and prices/growth have been very strong for three years now. I myself am in the process of grabbing building #2 this year. Depending on what kind of investor you are will determine where you want to buy. If you buy south of the loop, you’re going to spend a lot less but also run into lower rents and worse (class C/D) neighborhoods. Come north and the prices are much bigger but you’ll get quality tenants (Class B/A) and better rents for sure. Is split faced cinderblock a national issue or just a local one? Im a real estate broker since 2004 and have definitely been running into it over the years. It is an absolutely true phenomenon that can easily be maintained as long as the brick is sealed every few years. Many builders during the peak used this type of brick, as it was much cheaper, but did not seal it which led to the ongoing issues. Deal with it case by case but know it can be sealed and fine. I’m very content with the products I’ve been seeing and saw a few 3-6unjt buildings over the weekend and wow, there were investors all over everything!! Great time to buy. 👍🏼
- BROOKLYN, NY · Member since 2017 · 7 posts · 5 votes8y
Morning Ted, excellent feedback. Thanks for taking the time. I think Chicago will be a good place for us to start building our portfolio.
- Real Estate Broker · Chicago, IL · Member since 2017 · 96 posts · 69 votes8y
@Will Rodriguez no worries at all. If you have questions about properties/neighborhoods, then do not hesitate to ask. Best of luck...
- Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes8y
Originally posted by @Will Rodriguez:
Hello,
I'm from NYC and looking to make our first purchase of a multi-family in Chicago. I've been coming up with a list of close to a hundred multi family properties which i'll dive deeper into. This is for a buy and long term hold. Focused more on cash flow than appreciation. I'm a little concerned because the numbers for these multi families look a little too good. I know there is a population decline but job growth continues in the right trajectory, and we all know the story with the crime. What's currently scaring investors the most in Chicago? Also, how big of a deal is the whole "split block construction" issue i've been hearing about?
Thanks!It is totally going to depend on where you are looking. Sounds like you are looking on the south side? If so, you need a very experienced agent to help you. I get phone calls monthly from out of state investors who bought on a bad block because it looked great on paper, and they did not factor in 40% vacancy rates in some of those areas
Second City Real Estate4.821 Reviews - Real Estate Agent · Chicago, IL · Member since 2016 · 44 posts · 22 votes8y
@Ted Kuhlmann, As I fellow born and raised Chicagoan and Broker I am going to caution you about making statements regarding crime and labeling a whole section of the city. What you've done can be considered steering or redlining.
@Will Rodriguez Crime in Chicago is a City Wide issue as it is in every burrow of NYC. However as you know some neighborhoods are better than others. If you have concerns about a particular address here is a website I've sent my clients to www.crimereports.com. Or simply come into town and drive around. You are going to get what you pay for.
Connect with an agent or agents who know the various neighborhoods of Chicago. As it is impossible for one agent to know every neighborhood.With respect to the Split Face Brick it depends on how long it was neglected. As a whole it is a cheaper product but once sealed it is fine. You just have to be certain to conduct scheduled maintenance.
Even in the worst neighborhoods you have block by block situation. Where you have oasis in some of the worst neighborhoods.
I hope this helps.Corey
- Real Estate Broker · Chicago, IL · Member since 2017 · 96 posts · 69 votes8y
@Corey D. McCray I personally use HeyJackass.com to find information regarding crime in the city. It's pretty evident according to the crime maps that nothing i said was untrue. The south/west sides of our city have given us (nationally) a bad name and its unfortunate. Catch you around in the market. :)
- Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes8y
Crime is an issue. There are better areas than others. "In general", the south and west sides of the city tend to be the areas that get the most negative ink. Thats coming from the Chicago Tribune references so it is what it is.
That being said, the one thing I'm not seeing anyone mention here are the other risks investing in Chicago - both from a city, county and state level.
1) The landlord laws in Chicago/Cook County are some of the absolute worst in the country. Evictions can take anywhere from 5 mos to a year. Its ridiculous.
2) The city, county and state are all in dire straits when it comes to finances. So there's only one way to fix the problem and thats thru higher taxes. We've already seen the city throw down one of the biggest tax increases in its history. The county just put some nonsensical beverage tax in place that got knocked out of the water but that means the county is either going to have to cut services or raise taxes somewhere else.
And oh by the way, both the city and the state have some of the biggest pension shortfalls of any entities in the country. We just had a huge income tax increase at the state level too.
That does not bode well for jobs. And that should be a huge red flag for any investor looking to pick an area to invest in. What happens if they increase your property taxes by 30%? Anything is possible. The state went two years (or something like that) without a budget...... And nothing was really fixed. They just pushed the can down the road here.
So before you look at chicago, I'd look a little deeper at some of the other issues that landlords face here. Crime is definitely one thing you need to be careful of when picking the areas to invest in. Negative population growth another. But landlord laws and the potential for huge tax increases should be worth keeping in mind as well and chicago has to be dead last on any list when you factor those things in.
I would run, not walk, away from chicago when considering a good location to invest in. Not unless you truly enjoy gambling. And try not to lose your mind when you spend 6 mos evicting a tenant.
- BROOKLYN, NY · Member since 2017 · 7 posts · 5 votes8y
A lot of great feedback so won't respond to anyone directly. We're very green on the real estate investing front so doing a lot of catching up. Currently on BP podcast 72 (which happens to discuss Chicago).
1. Right now i'm putting together a spreadsheet of multi families with some data points (e.g. price, units, NOI, crime area, rent roll, taxes, last rehab, year built, etc..) using information from redfin. I'm also signed up for alerts in my search area and updating the spreadsheet as new listings come through. Just using the spreadsheet to filter out properties before digging deeper (most likely with a real estate agent).
2. We're stilling obviously trying to figure out a process that works for us and once we figure that out I can automate some of it since i'm a software engineer.
3. I've been using https://www.trulia.com/real_estate/Chicago-Illinoi... to checkout the crime areas.
4. All good points on the taxes (noticed that when looking at the properties) and also on tenant friendly laws (heard the same thing in podcast 72).
5. Once we have a list of properties we will start looking into insurance companies and more importantly property management companies. If we're not able to find a top notch property management company in the areas we're looking at then no sense in making a purchase in that area.
We're also looking at Indianapolis, Atlanta, and North Carolina but focusing on Chicago first before taking a look at those properties. Just a lot to take in right now but appreciate all of the input.
Thanks everyone - Naperville, IL · Member since 2017 · 19 posts · 8 votes8y
@Will Rodriguez I'm from the Chicago Burbs, so I won't have much weight to my input, but I would caution you to actually come take a look as Chicago's neighborhoods are really block by block on what's a D/C to a B/A neighborhood in some areas.
From what I can see, you don't want to just use Trulia / similiar macro statistics if you're looking at properties, because in some areas if you're literally on the wrong side of the street, you're in the 'bad' part of town.
Crime in general seems to be heavily gang related and most places that I've driven through you won't have to worry, but then again I don't live in the city and the parts of town that I travel to aren't sketchy. Though I do have a friend who got mugged/car jacked in broad daylight by gunpoint in the south loop in front of his house. Luckily the cops were near by and they caught 2/3 of the muggers and he didn't lose anything (they were going to steal his car as he got home).
Best of luck to you!
- Real Estate Entrepreneur / Investor · Chicago, IL · Member since 2016 · 688 posts · 367 votes8y
How’s it going @Will Rodriguez
I know it’s expensive to invest in New York, how’s the current market situation out there?
As far as Chicago. It’s definitely block by block. Since your looking at Buy and holds I imagine your looking at the south and west side. Only because the North side is so expensive and the cash on cash return is terrible. Also consider the south and west suburbs.
Well for one just be advised the landlord always pay the water bills in Chicago. I have seen bills as high as $5,000 owed and you have to pay it. So just pay the water bill. Next watch the property taxes in some areas. I just seen a couple of properties in Oak Park and they were 11k!!!! But you can appeal these to get them down. Sometimes it goes down a lot sometimes it’s just a little.
As far as crime, crime is everywhere. Chicago isn’t as bad as people/ mainstream media portray it. Some areas are kind of wild but it’s 4 areas I wouldn’t advise anyone to invest. So if someone isn’t familiar with a certain area of Chicago they Regurgitate what the mainstream media says or what other people who never been in that area say. Truila is accurate sometimes but I decided to experiment and I went to certain areas in the day time then I came back when it was dark. The result was it was more or less the same. So I think just like zillow ARVs and “comps” they are using a formula to compute the area and they may mark a couple of blocks yellow or orange when it’s really not. Sometimes you have to see things for yourself to see if they are actually true.
Now, honestly the MFHs That I have seen for the most part have been in high crime areas. It’s sad because I’m looking for a new one myself lol. Hopefully the inventory will get betterin the next month or so. But I’m not counting on it.
I do agree somewhat with what @mike H. Said about how the landlord Laws are ridiculous because they are and how the state handles money. It’s cringe worthy but taxes everywhere will continue to go up even if it’s the slightest. Historically they have always went up. That’s what the government does, tax people and make up laws and enforce them to profit off them.....
I noticed your list include Indiana. Northwest Indiana is a good option as well. They have landlord friendly laws and it doesn’t take too long to evict someone. Taxes are lower than Illinois and overall you could make some decent money flipping in the flipping areas of NW Indiana or if you want to stick to just rentals there are overall better options IMO to choose from compared to Chicago.
Overall Chicago is a great city. I love my city but I try to not be biased as well. If you want to invest in Chicago than do it. I’ll help you or anyone else if you want some help. But there are certain areas and things you should avoid. Indiana is great area to invest in as well. Plenty of out of state and foreign investors I have help get started investing in that area as well. Its some nice areas located in Indiana. I personally wouldn’t live there though LOL, no disrespect to anyone who loves Indiana.
Let me know if I can help.
- Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes8y
if I were you I would stay in NY and forget CHICAGO
Plenty of good cash flowing properties upstate NY
- 8yRonan M.Pro MemberRental Property Investor · Chicago, IL · Member since 2015 · 352 posts · 281 votes
I have spoken to other investors from NY who have also said "wow..the numbers for Multi's in Chicago look great"
That can be true, but for the most part the properties they were looking at were on the Southside of Chicago. Its a totally different story for more affluent areas of the Northside. Much higher buy in prices and much less cash flow.
But that is not to say the Southside should be forgotten. There is money to be made if you have a strategy and most importantly boots on the ground. The media quite RIGHTLY portrays Chicago as a lawless out of control place. I say RIGHTLY because the amount of shootings and gun violence in this city as a whole is a disgrace. Much of this (but not all) is in the South and West sides. However we would be quite WRONG to assume that everyone who lives in those areas are gun slinging bandits. Its a small minority of out of control people that create all the negative headlines.
Much of the Southside is seeing great progress. Many of the residents are fine people who are just as tired of the violence and want no part of it. For the investor you can acquire great properties at good prices and how you run your business and manage your properties will determine success or failure.
There are many OOS investors who bought Southside properties because of great numbers on paper and the reality was a lot different. It won't work without good local knowledge and hands on management.
Also, don't look at any pro forma numbers on the fancy marketing materials. They tend to be pie in the sky especially for property on the Southside.
I own and operate Multi's on the Southside of Chicago. Feel free to reach out to me if you would like any info.
- 8yRonan M.Pro MemberRental Property Investor · Chicago, IL · Member since 2015 · 352 posts · 281 votes@Elbert D.
"Some areas are kind of wild but it’s 4 areas I wouldn’t advise anyone to invest"
Hi Elbert. What are the 4 areas you do not recommend ?
- Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes8y
@Will Rodriguez There has been a ton of great information given on here already. I personally work and invest in the near Southwest suburbs of Chicago about 20 minutes from the loop. We have relatively low crime, stable population, lots of amenities, etc. We do have high taxes as others have mentioned, but I can tell you that we never have a vacancy due to the strong rental demand!
Chicago is a huge market, and so small areas of the city can get a lot of press. If I were an out of state investor, I would start first with my "team". Who will manage your property? What contractors will you have in place to fix the place? What real estate agent will you have helping you. The right team can easily steer you away from the "bad" areas.
- Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes8y
Some good suggestions there. Looking outside of cook county might make more sense. But tough to find the numbers like you'll see in some of the city properties. But those number can be incredibly misleading. NW indiana and indiana in general make a lot more sense than illinois. You can find stuff with decent numbers. Rental laws are the opposite of cook county in that they seem to favor the landlord. And the property taxes are also on the opposite end of the spectrum as well. Indiana has super low property taxes compared to cook county and most of the collar counties around cook.
There are towns in will county where property taxes are 4 to 5% of the market value..... And, again, they are going to be looking to raise taxes at some point again to fix the pension shortfall.
- Rental Property Investor · Shorewood, IL · Member since 2013 · 12 posts · 10 votes8y
I have 36 sfh's in and around Cook Co. If I could pick them up and drop them in another state to avoid the taxes I would. The assessor is really the one who has the biggest slice of the pie, and no skin in the game. Super frustrating! Depending on your experience, you can make money in any neighborhood. Some of the worst areas will lean more on Section 8 than the nicer areas. The areas that are on the news on a daily basis are very condensed and are not a good representation of the Chicago area overall.
Have fun investing and best of luck!
- Real Estate Agent · Chicago, IL · Member since 2016 · 44 posts · 22 votes8y
To all the licensed brokers who commented on this post please remember stating opinion on crime in any area puts your license in jeopardy. We are jot allowed to state our opinion regarding crime because that is akin to discrimination. That is text book. You will see that on your next C.E. course.
If you are going to provide info via a web site make sure it is a factual site directly sourced from a reliable site i.e. the FBI, or local police department. Send your client there anf let them make thier own decisions. Sites such as HeyJackAss.com does not tell you if a resident on the block is a pedophile, the number of robberies, burglaries etc.
As an out of state investor I would be leery of those that simply say stay away from certain chuncks of an entire city. Common sense wouldead me to perform research and do a deep dive into the numbers.
The best way to not get burned is to do your research online and then go to the area and visit it see for yourself.
Best of luck to you Will.
- Farmingdale, NY · Member since 2016 · 13 posts · 15 votes8yI am from Chicago live in NY and invest out of state... just not in Chicago. My parents owned a rental, took >7 mo to evict a nonpaying tenant. Taxes continue to rise with no signs of abating given Chicago's fiscal situation. Contrary to all the advice given here there are safe areas on the southside (where I grew up) to invest in, Morgan park, Beverly, around midway and in a few near suburbs like oak lawn and evergreen park etc. not many multis In those areas though. Best of luck.
- Developer · Chicago, IL · Member since 2016 · 82 posts · 88 votes8y
This thread is a mess. You have people claiming that it's "redlining" to tell people that some parts of the city are rougher than others (hint redlining only pertains to lending, not the correct term here). Then you have some guy from Florida making the super in depth one sentence "don't go to Chicago, stay in NYC" comment despite the fact that he isn't in either place. None of these responses really add much to the conversation.
Chicago does have higher returns, that's for sure. That's just a function of land and buildings being abundant here. This city was built to grow to the size of NYC and had a peak population (in the city limits) of 3.8 million people. 2.6 million people now live in that area. Simply put there is a lot of supply. This also means there are a lot of not so great parts of the city where those 1.2 million people used to live and now moved out of leaving a bombed out shell of what once was. Those areas are, in fact, largely on the South and West sides of the city. Does that mean those areas are a terrible place to invest? No. There's a niche for everyone here and for some people that niche is grabbing properties for cheap in not so great areas and making a much higher return as a reward for that extra risk. There are also people who make money buying basically zero risk properties in super wealthy areas. It's all about understanding what risks you are taking and whether your investing style works with the areas and properties you are looking at.
It's important to note that Chicago is extremely block by block. So while people will make sweeping generalizations about the South side or the West side, there is actually extremely fine grained detail to that. Hyde Park is one of the nicest and hottest areas in Chicago and it's right in the middle of the South side, but within Hyde Park there are really nice areas where BAM you cross the street and it's very seedy. There are also really bad neighborhoods where you can find islands of super nice, clean, housing with very few criminal elements on the block. Sometimes there will be a whole pocket of a neighborhood where every block has a block club and they just don't let the crime or decay set in. Those can be great areas to invest if you can find and identify them.
At the end of the day the answer to the question of whether or not you should invest here is actually another question: Are you willing to put the time and effort in to get to know the markets you are considering on a fine grained enough scale to be able to invest with confidence that you know exactly what you are buying? You WILL get burned if you jump into Chicago and start buying willy nilly without even seeing the place. There are simply too many places that are challenging for an absentee landlord, too many bad property managers, or the off chance a drug dealer sets up shop in your building. But if you are willing to spend enough time here actually visiting the buildings and areas you are looking at and willing to get out of the car and walk some of these rough around the edges areas, you can and will do quite well.
My anecdotal example is a corner of a neighborhood on the SW side which is known for being pretty rough and gang infested. A few years ago I found out there were some serious big name companies making some flashy investments in one corner of the hood. I identified potential and got established along what is basically a 4 block by 10 block corridor following a beautiful commercial street and shadowing a L line. I now own dozens of units in that area and control a quarter block in one place. This has allowed me to further leverage those investments made by much larger players in the area by selectively targeting the few truly derelict properties in my corner of the neighborhood. I intentionally go after anything that is vacant or blighting the area. 95% of the properties are working class families keeping their homes well maintained, but there is a constant turnover of that other 5% that opens the door to me. I grab the properties holding the area down and thereby increase the values of the buildings I already hold in the immediate area by eliminating places that gangs or vagrants might set up shop in. This has compounded the big commercial investments I've mentioned which already caused an increased police and security presence. Now I am actually worried that other people are catching on to what I've been doing for 6 or 7 years now because I'm starting to see investors buying and turning over other less derelict properties in "MY" hood.
You don't have to go as all out as that, but opportunities like that exist here. In what other major city can you basically claim a little area as your own "sandbox" and start building your own little castle? Where else can you pick up units for $20k a piece on a block where you just had a six unit you rehabbed appraise for $1.1 million? Only in Chicago. We are just rebuilding from the second Great Chicago Fire, huge swaths of the city have been systematically devastated since WWII. After the first devastation of Chicago in 1871, the newsmen from Chicago were on the first train out the next morning to all corners of the United States on their way to proclaim "You will never have another opportunity in your life to make a fortune as you will in the rebuilding of Chicago". I'm very much saying the same here, the city has been destroyed again this time at the hands of man, not nature. But Chicago is a city that if only because of geography MUST EXIST. If you can find a way to invest wisely here, you will never see another opportunity to make a fortune like it anywhere else.
- Phoenix, AZ · Member since 2017 · 96 posts · 66 votes8y
Originally posted by @Will Rodriguez:
Hello,
I'm from NYC and looking to make our first purchase of a multi-family in Chicago. I've been coming up with a list of close to a hundred multi family properties which i'll dive deeper into. This is for a buy and long term hold. Focused more on cash flow than appreciation. I'm a little concerned because the numbers for these multi families look a little too good. I know there is a population decline but job growth continues in the right trajectory, and we all know the story with the crime. What's currently scaring investors the most in Chicago? Also, how big of a deal is the whole "split block construction" issue i've been hearing about?
Thanks!Wow! After reading of the investing insights on Chicago I realize how fortunate I am to invest in Phoenix. It's the total opposite. Crime is nominal, taxes are low, evictions are quick, there is "in flux" growth of jobs, it's sunny ;-) in the winter too, numbers are good, investments pay off. Why Chicago Will? You gotta death wish with your investments?
- 8yJohn CasmonPro MemberCincinnati, OH · Member since 2013 · 1k+ posts · 1k+ votes
@Will Rodriguez How do you plan on managing the property? If you're hiring a PM or turn-key provider, start by vetting the top ones and go from there. They will steer you to the right neighborhoods for your goals and needs. Ensure that you do a LOT of due diligence in this area as a lot of Chicago turnkey providers are having problem with city violations. Property management and screening tenants is going to make or break you.
I invest on the north side and prefer the NW side for a balance of cash flow and appreciation. The near south side has some great parts as well, including Bronzeville and Bridgeport. Talk to people who know and invest in those areas and take it from there.
There is a lot wrong with the city from crime, to pensions to taxes, to a declining population but the reality is the the declining population is isolated to one area. With all of that, 2.7MM people call Chicago home, so there is still going to be great opportunities for investors. - BROOKLYN, NY · Member since 2017 · 7 posts · 5 votes8y
@John Casmon at this point I have a list of over a hundred properties across the US and i'll get daily alerts from redfin when any new multi-families meeting my criteria pop up. I'm actively working on software that i'll be able to feed the list to and it'll narrow it down further for me. My partners (brothers) are actively looking into real estate brokers and PM so that we can further filter out our list and start sending out offers.
I appreciate all of the advice I've received here. It was a lot more than I expected. I know Chicago is a risk, but I will be spending a lot of time upfront in an attempt to reduce the risk as much as possible. I was raised and still live in an area of Brooklyn that was one of the worse parts of NYC. These beautiful brownstones use to sell for under 150K about 20 years ago. This neighborhood is now one of the hottest real estate markets in the country. These same brownstones now sell for about 1M without renovations or 1.4M with renovations. I'm not saying the same thing will happen in Chicago, but the risk/rewards are worth it for me. I'm looking at all of this as a long term play (15+ years). I'm lucky enough I can partner with people I trust and we all have high paying jobs so are able to take on bigger risks.
Now i'm not only looking at (Illinois/Chicago. I have listings for 15 states and that's why it is important I have a quick and automated way at filtering through the list as I get new listings. If I do go with Chicago I will be leaning more towards fully occupied properties with preference towards section 8 tenants. - Contractor · Fort Myers, FL · Member since 2017 · 19 posts · 6 votes8yWill, The Chicago proper is only 30% of the total chicagoland, with that said you should consider investing in suburban cook county areas particularly close to O'Hare and Midway airports, and areas close to the el train lines and metra train lines. Another area that is great for multi family is Dupage County, it's going to cost you a pretty penny but rents there are growing at a fast pace and people rent those for those high prices because it's a good area top 25 county in the country and people can't afford single family houses there unless they make at least 100 k per household which is alot for the midwest. South and west sides are overall pretty bad areas with crime but don't let people trick you the rest of city of Chicago is pretty ghetto too but it's weird there because there's a lot of uber rich people mixed in with the super poor. There's not alot of middle class people in city of Chicago, so if you are buying in the city you either have to be section 8 or luxury. The middle price points will be difficult to lease out since poor people want one thing and the rich want another.
- 8yScott KronePro MemberInvestor · Northbrook, IL · Member since 2017 · 352 posts · 295 votes
@Will Rodriguez - @John Casmon @Brie Schmidt and others are very experienced rental investors in both the Chicago market as well as the Midwest. The key word of Chicago caught my attention. There are many good points for either investing in or not investing in Chicago. Personally, it is not a sub-market we have chosen to pursue. However, are their are opportunities. We look for those areas which are supported by demographics and statics. Those are all good underlying principles for your investment strategy. We rely on those for our investments. In Chicago, we choose the supporting market of self storage - even then it is dictated by specific locations based upon supply and demand. Do we avoid neighborhoods - yes, because the demand does not warrant more product in the market place.
So, to answer your question, you have heard from some leading investors in Chicago - I think we all agree that due diligence is the underwriting most important factor. Know your strategy, know your product and follow the research.
- Attorney · Northbrook, IL · Member since 2017 · 719 posts · 549 votes8y
Wow, lots of strong opinions on this topic. My biggest client lives in Manhattan, NY and has accumulated over 500 units, mostly on the south side of Chicago. Yes, he has to deal with tough issues like shootings in front of buildings or tenants not paying rent. However, he's coming from an area where investors are getting 4% CAP and he's getting buildings with 15% CAP so he's happy. He's also been fortunate to have blocks where he purchased two flats for $40,000 that are now selling for $250,000.
At the end of the day, this is about making money and areas like Woodlawn, Kenwood, Washington Park, South Shore give great opportunities to make money.
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