South Shore Area Feedback + Cap Rates on 47 unit

[Khizer Husain]

Hello,

I am looking a 47 unit Multi-Family Rehab project in the following area specifically:

E 75th st Chicago Illinois 60649.

It is a 40 unit + 7 unit commercial rehab project. A few questions:

1) How is the area? How is the renters market there specifically?

2) What kind rents can I expect for 1 and 2 bedrooms?

3) What are the going cap rates for stabilized B and C class buildings in that area?

4) I want to get the 7 commercial units converted into apartments? Ive been told this is possible and the new mayor has removed redtape for this process. 

Please confirm all. Thank you

[Jake Fugman]

@Khizer Husain  The South shore has seen some improvement in recent years.  The nicest section is the Jackson Park Highlands near the golf course.  Once you get south of 75th certain blocks can be rough.  I recommend investors target the blocks with as many single family units as possible.  The blocks that are dominated by 6-8 unit buildings have lower upside IMO.   Most owners in this market expect and embrace section 8 voucher tenants. 

Cap rates on the decent blocks are in the 8-9% range for 5-10 units Ive seen.  You might get better in larger buildings. 

Rents are APPROX 1 beds = $600-700/mo 2 beds =  $750-950 3 beds = $1000-1100/mo