Class B /C Rental market among 77 communities of Chicago

Real Estate Agent · Chicago · Member since 2020 · 23 posts · 20 votes

Happy New Year All, my first BP post ever

For the background: I have done 1.5 flips ( listed to sell the second one) along with my full-time job in the Chicago market. It has been very challenging managing and not so lucrative for us.

So pivoting and looking into rental strategy either long-term or short-term rentals. Looking for class B or C neighborhoods where I can expect some appreciation and stable cash flow. So I can manage properties along with my full-time job.

Which neighborhoods/communities in Chicago would you recommend as per current market trends and data in 2023?

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Brennan Crick

Realtor · Chicago, IL · Member since 2017 · 42 posts · 20 votes

Hello and happy new year, as you know it’s all about numbers in any market so it’s solely based on your buying power in what communities you can buy in. But typically I would start 30 to 40 mins outside the city in the suburban areas. The trend now is how to buy creatively instead of paying high interest rates. A key example would be to find a property who has a fha loan that you can take over (assume the loan) and use your down payment for cash for the difference. but making sure your margin is good enough to cash flow after ALL the expenses has been accounted for. (Maintenance, trash, water, cap-ex, tax’s, PM, and vacancy)

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Brennan Crick
Realtor · Chicago, IL · Member since 2017 · 42 posts · 20 votes
3y
Hello and happy new year, as you know it’s all about numbers in any market so it’s solely based on your buying power in what communities you can buy in. But typically I would start 30 to 40 mins outside the city in the suburban areas. The trend now is how to buy creatively instead of paying high interest rates. A key example would be to find a property who has a fha loan that you can take over (assume the loan) and use your down payment for cash for the difference. but making sure your margin is good enough to cash flow after ALL the expenses has been accounted for. (Maintenance, trash, water, cap-ex, tax’s, PM, and vacancy)
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John Warren
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
3y
@Ashwin Abichandani there are so many places you can invest in Chicago, but I believe it is important to start with the end in mind. Where do you currently live? North? South? West? You can look in the NW side of the city in spots like Avondale, Irving Park, Jefferson Park, etc. You can look west in areas like Humboldt Park, Hermosa or Logan Square. You can go SW in spots like Little Village or Tri Taylor. The south side is chalk full of C class (and lots of D) areas where cash flow is available for those who are able to manage there.
I personally invest close to where I live. I have found the near western suburbs to work well for me, but I can easily see a dozen areas where things would work well to build a portfolio.
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Crystal SmithPro Member
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Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
3y
Quote from @Ashwin Abichandani:

Happy New Year All, my first BP post ever
For the background: I have done 1.5 flips ( listed to sell the second one) along with my full-time job in the Chicago market. It has been very challenging managing and not so lucrative for us.
So pivoting and looking into rental strategy either long-term or short-term rentals. Looking for class B or C neighborhoods where I can expect some appreciation and stable cash flow. So I can manage properties along with my full-time job.

Which neighborhoods/communities in Chicago would you recommend as per current market trends and data in 2023?

1st comment- I know on this forum and other real estate forums that neighborhoods are referred to as Class A, B, C, or even D. And I know what the references mean but in commercial real estate, the class definition really refers to property types, not neighborhoods. I bring this up because the diamond in the rough is to find what's considered a Class C property in a Class A or B neighborhood- The CRE definition of Class C is- "Buildings are at least 20 years old and in a state of relative disrepair. They may offer functional space for tenants, but most are in need of substantial renovations. In light of this, Class C buildings normally collect lower-than-average rents."

Ok, I got that off my chest and I'll get off my high horse. Of the 77 areas here's where I believe you can cash flow and expect appreciation.
Morgan Park (especially if you find one in a mobility area), Beverly, Mount Greenwood, Ashburn, Clearing, Bridgeport, Brighton Park, Woodlawn (The closer to the University the better); Washington Park (Again-the closer to the university the better); Oakland, Lower West Side, East Garfield Park (Gentrifying- The closer to Western The better); Humboldt Park & Hermosa.

With all that said we believe you can cash flow in almost any community & with a few exceptions over a period of time all properties will appreciate.
312-681-7487
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Jay ThomasPro Member
Real Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
3y
Of course, if you live in the downtown area or near the lakefront, you can find higher end investment options that aren't as risky. However, for those looking for cash flow and lower risk investments, it's important to understand the areas on the outskirts of Chicago and make sure to thoroughly research each area before committing to an investment property there. With enough due diligence and careful analysis, you can find some great opportunities in a variety of different neighborhoods that fit your needs. The key is to have a plan in mind and stick with it! Good luck!
[email protected]832-889-5607
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Ashwin AbichandaniPro Member
OP
Real Estate Agent · Chicago · Member since 2020 · 23 posts · 20 votes
3y
Quote from @Brennan Crick:

Hello and happy new year, as you know it’s all about numbers in any market so it’s solely based on your buying power in what communities you can buy in. But typically I would start 30 to 40 mins outside the city in the suburban areas. The trend now is how to buy creatively instead of paying high interest rates. A key example would be to find a property who has a fha loan that you can take over (assume the loan) and use your down payment for cash for the difference. but making sure your margin is good enough to cash flow after ALL the expenses has been accounted for. (Maintenance, trash, water, cap-ex, tax’s, PM, and vacancy)

Thank you @Brennan Crick for the info. Any suburbs you suggest looking at for a rental market close to Chicago?

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Ashwin AbichandaniPro Member
OP
Real Estate Agent · Chicago · Member since 2020 · 23 posts · 20 votes
3y
Quote from @John Warren:

@Ashwin Abichandani there are so many places you can invest in Chicago, but I believe it is important to start with the end in mind. Where do you currently live? North? South? West? You can look in the NW side of the city in spots like Avondale, Irving Park, Jefferson Park, etc. You can look west in areas like Humboldt Park, Hermosa or Logan Square. You can go SW in spots like Little Village or Tri Taylor. The south side is chalk full of C class (and lots of D) areas where cash flow is available for those who are able to manage there.
I personally invest close to where I live. I have found the near western suburbs to work well for me, but I can easily see a dozen areas where things would work well to build a portfolio.

Thanks, @John Warren for the info. I live north, so areas like Avondale and Irving park would be close by.
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Mark AinleyBusiness Member
Property Manager · Roselle, IL (Chicago Suburb) · Member since 2013 · 2k+ posts · 1k+ votes
3y
@Ashwin Abichandani if interested send me an email and I will share with you something I am working on that really breaks down the suburbs that can be a help. If you want to consider those areas more on the northside my Podcast partner @Tom Shallcross can really give you insight there.
[email protected]630-781-6744 Podcast Guest on Show #72
GC Realty & Development LLC4.61061 Reviews
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Ashwin AbichandaniPro Member
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Real Estate Agent · Chicago · Member since 2020 · 23 posts · 20 votes
3y
Quote from @Mark Ainley:

@Ashwin Abichandani if interested send me an email and I will share with you something I am working on that really breaks down the suburbs that can be a help. If you want to consider those areas more on the northside my Podcast partner @Tom Shallcross can really give you insight there.

Thanks, Mark, I will send you the email.
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