Chicago Market House Hacking 2023: Understanding Neighborhoods
I noticed the Chicago market has changed quite a lot since I started back in 2018. I have seen interest rates change from four to two to seven percent from 2018 to 2023. One thing that did really well during this time is multi-family properties. However, finding these properties at the right price is close to impossible. They are there, but they get snagged quickly. The multi-family properties I have been able to snag are due to some decent amount of work needed (negligent owners), not TLC. Even with an FHA, the work needed can creep upwards of similar or more than the closing costs, so you're looking at doubling your cost to own a multi-family property.
Any good news? Well, the rents in Chicago have been raising, even in the Southside, which is mainly coming from one particular neighborhood: Pilsen. The closer a property is to Pilsen the more you see the rent and value appreciation take affect. For example, I have bought a property in an undesirable area, and noticed that the rent and value hasn't changed much. While one which is very close to Pilsen increased by 50% in both rent and value. In any case, understanding the neighborhood is important to investing in Chicago. Drive around, ask people that live there how they feel about the area, and, if you can, live there for a year. I have done that with all of my properties (except one - I am sure you can guess which one), and it has helped me gauge the market.
Cheers!
Love this take!!
Great stuff @Noe Gil!! And nice work!
I am not sure I buy that Pilsen is the one southside of Chicago neighborhood driving rent increases, but it is surely a gentrifying area and factor.
I think Bronzevilles & Woodlawn's ability to have more new developments has allowed that entire se coordinator to become a huge factor on the southside.
Regardless, whatever you are doing is working so keep doing it!
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You are absolutely on point with this information. Multi-family properties are going super quick in certain neighborhoods, but there are a lot of buildings that need work. It's super hard to find turnkey multi-family properties which works well for a buyer because you can negotiate purchase price, credits, etc. But every neighborhood also has its own market and it's super important to understand that. I just posted a video on YouTube on certain neighborhoods in Chicago and there are some neighborhoods where the prices are falling or staying longer on market. Great post!
The most successful Chicago investors I know are all in 3 to 4 unit properties. Ideally find one that is in scary condition and empty. Then renovate, live there for 12 months and have much of your mortgage paid by the other units. This is especially true for novice , first time house hackers and investors. I like properties near trains or highways. Not certain about older suburbs but they often also have 3 and 4 unit properties.