East Lincoln Park luxury condo market

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East Lincoln Park luxury condo market

Anupam Desai
New to Real Estate · Boston · Member since 2019 · 2 posts · 2 votes

Hi all, I'm considering a move to Chicago and interested in hearing people's opinions of luxury condos in a prime location like East Lincoln Park. What I had in mind was relatively new construction places, 3/4 BR in a boutique building, maybe 1-1.5m range. It looks like rents for such a place might be around 6-7k. The reason I'm interested in something like this in particular is to keep the number of units I'd own down and have low maintenance and low fuss, reliable tenants. My day job is pretty busy plus the two young ones...leaves little time for managing properties. I anticipate returns would be lower on such an investment, which I'm willing to accept to a point, but am I generally better off paying a property manager and going to a different part of town? Thanks!

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John Clark
Member since 2018 · 1k+ posts · 1k+ votes
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Keep in mind that the luxury end of the Chicago market, particularly condos, is waaaaaay overbuilt, so you will have zero appreciation and possibly a capital loss for a long time.

Also, given Chicago's finances, property taxes are going to soar.

Further, the Illinois legislature just reported out of committee (so it will go to the floor and get voted on) a repeal of the current ban on rent control. Of course the bill will pass, and Chicago will immediately pass a rent control law.

Finally, how well do you know Chicago? Even if you are going to be here for several years, it might make sense to rent for a year, find some hidden gems of neighborhoods and invest there. Places like Lincoln Park, Gold Coast, Lake View, and such (Bucktown) are fully priced, so your appreciation will be limited.

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  • Mark AinleyBusiness Member
    Property Manager · Roselle, IL (Chicago Suburb) · Member since 2013 · 2k+ posts · 1k+ votes
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    @Anupam Desai I understand your approach as written but I think there is a middle ground that lowers risk and can offer a similar result.  There are 3/4 BR newer cos units that will provide you everything you are looking for in the 400-600k range that can set you up the way you are looking to be set up and get you a $3800-$4500 type of rent.

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  • Jonathan KlemmBusiness Member
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    Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
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    @Anupam Desai - I think you just have to decide what your overall end goal is.  Doesn't sound like you need the cash flow so finding some higher-end condos that will appreciate well may not be a bad idea and is a pretty low-stress way to invest.  Also, if you buy new construction or somewhat newer your maintenance cost should be extremely low.  I like the idea of investing in condos now because everyone is wanting to move out of the city.

    The one thing I don't like about condos is the HOA fees but ultimately you pay an HOA fee for any house, it's called paying for a new roof, siding, common areas, etc. It's just for people to look at it that way, myself included.

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  • Henry Lazerow
    Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
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    You can make great returns on 4 units in Lincoln Park/Lakeview. Most biggerpockets members don't target these areas but I have had a few clients who specialized in them and did really good. You aren't going to make money buying new construction or condo buildings style though. It will be finding either a 3 unit with a duplex (2 story unit) and then doing some mild cosmetic updates and getting really high rents or finding a 4 unit building and doing the same cosmetic rehab to raise rents/property value. I am talking simple rehab like cabinets and counter tops maybe add in unit laundry. Under 10k a unit. 

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  • Anupam Desai
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    New to Real Estate · Boston · Member since 2019 · 2 posts · 2 votes
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    Thanks all. 

    So @Mark Ainley you're saying to buy twice as many units with my money, to diversify and lower risk? Sounds reasonable except the idea with buying higher end was to reduce the number of units I have to manage. I suppose your vote would be for a property manager then. 

    @Jonathan Klemm, you mentioned you like the idea of condos now because everyone is moving out, the idea being that eventually people will tire of the suburbs and move back in? That's what my wife keeps saying, and she generally seems to know what's popular before it's popular. I'm trying to get her to pick stocks. 

    @Henry Lazerow appreciate your input. This is one of my fears, that a new construction building someone else is taking the upside potential, so that would leave me with a thin margin, which would be okay if things are stable, but also considering whether to look for more safety in case the market turns south.  

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  • Mark AinleyBusiness Member
    Property Manager · Roselle, IL (Chicago Suburb) · Member since 2013 · 2k+ posts · 1k+ votes
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    @Anupam Desai In either case the tenant and property should yield limited touchpoints so self management is still realistic.  If you have the time and are local then I encourage self management.  With professional management you buy a chunk of time back and have a partner that is supposed to be an expert and can assist you on going.

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  • John Clark
    Member since 2018 · 1k+ posts · 1k+ votes
    5y
    Keep in mind that the luxury end of the Chicago market, particularly condos, is waaaaaay overbuilt, so you will have zero appreciation and possibly a capital loss for a long time.

    Also, given Chicago's finances, property taxes are going to soar.

    Further, the Illinois legislature just reported out of committee (so it will go to the floor and get voted on) a repeal of the current ban on rent control. Of course the bill will pass, and Chicago will immediately pass a rent control law.

    Finally, how well do you know Chicago? Even if you are going to be here for several years, it might make sense to rent for a year, find some hidden gems of neighborhoods and invest there. Places like Lincoln Park, Gold Coast, Lake View, and such (Bucktown) are fully priced, so your appreciation will be limited.

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  • Sarah Lewis
    Investor · Chicago, IL · Member since 2017 · 40 posts · 33 votes
    5y

    You will not have appreciation and taxes will be very high. I don't see any upside from high end condos in Lincoln Park.

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  • Jonathan KlemmBusiness Member
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    Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
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    @Anupam Desai - Right, I think everything in life comes and goes as trends.....including desired living locations.  

    That basically one my favorite warren buffet quotes "be fearful when others are greedy and greedy when others are fearful"

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