Chicago high-rise investment

[Teekap Pate]

Hello, does anyone have any feedback on ROI/rental income for condos in the 60610 or 60614 zip codes in Chicago? I'm looking at the high rises near Lakeshore drive area. I like the added security with doorman and onsite maintenance but know the assessments can be high. Looking to hold this as long term investment and rental income.

[Jonathan Klemm]

Hey @Teekap Pate - Many condo deals in that area of Chicago get killed by the outrageous HOA fees. If you can find something where the numbers work...jump on it.

The appreciation will always increase, but I have noticed better long-term value in small multi-family vs. condos.

Do you have a purchase price in mind?

[Paul De Luca]

@Teekap Pate

I agree with @Jonathan Klemm. It's really difficult to get those condos to make sense as investments in my experience. Maybe if you put a large down payment on the property and you find a low HOA fee building but there is also the potential risk of large special assessments if the HOA isn't well managed.

[Martin M.]

@Teekap Pate

HOA fees are generally high in high rises in those areas. They vary in range but just to give you a reference.... $1,000 a month is on the lighter side and upwards of $2,000 isn't unheard of.

On the upside the fees often include utilities, internet, water, heat etc.

Also on the upside, property taxes generally not too bad. With many buildings the larger the unit and the higher the floor the higher the taxes.

HOAs can limit your ability to rent the unit too so you'd need to scrutinize the HOA bylaws to see if rentals are allowed or if there are any restrictions on rentals such as owners can only lease their unit for a max of 1 year etc.. Keep in mind too that even if rentals are allowed today.... the HOA can change that in the future. At which point you could sell.

As far as resale.... high rise condos appeal to a very limited market of buyers. Probably the smallest buyer pool compared to other property types. The view from the condo, e.g. the higher the floor, you can see the lake from it etc is valued much more to renters and owners than a 2nd or 3rd floor unit.

The zip codes you've picked are nice. I wouldn't count on skyrocketing appreciation in a high rise but if the numbers work or you could see yourself living there at any stage in the future maybe not a bad investment.

Good luck!

[Teekap Pate]

Hi @Jonathan Klemm, I appreciate the response. I’m looking at a purchase price of $250k for 1 bedroom or $325k for 2 bedroom. Lakefront view. 

[Teekap Pate]

@Martin M. yes that's what I'm seeing as well in terms of HOA. I'm looking at this as a first rental investment outside of my primary home which we own. It would be replanting roots back in Chicago to hold for long term. Thank you for the detailed response- very helpful

[Eudith Vacio]

Hey @Teekap Pate 👋🏽

I definitely concur with the comments on this post. High rise condos are not the best investments + some condo's make you wait a couple of years before you can even rent them out OR don't allow rentals at all. What you're looking for is perfect for a homeowner or someone that wants to live there, but all those extra amenities (doorman, etc) are too costly for you to make any profit. 

Maybe stick to condo's in small associations 8-10 units that are self-managed or don't have any rental restrictions. 

[Jonathan Klemm]

@Teekap Pate there is a very slim chance you will find something on the far north or far south side of Chicago on the lake front at that price point and even less likely chance you will find one that works with the HOA dues.

In my opinion, you'd be better off looking for condos in those areas that need renovation - flipping.