How do I set target cap rates in Chicago? (Logan & Bridgeport)

[Spencer Slaton]

Hey everyone, I'm looking to purchase a multi-unit building (2-4 units) in Chicago (Logan Square / Bridgeport). The price range is in the 200K-400K range, and I'm having a major issue in my evaluations. To set my baseline, for a sale price I need one of two things to be accurate and i'm having issues with both.

• Area cap rate - I have no way to accurately determine what cap rate should be for my areas. I've heard everything from 5%-6% to 8%-10%.
• Comparables - There just doesn't seem to be any source online to generate an accurate comparable. Most sites have a far too small sample size and are often far different than my building.

How do people get passed this issue? If any of you have bought in these areas or Chicago in general what was your target cap rate and why?

[Nick Patterson]

For 2-4 flats your best option is the MLS. The national association of Realtors states that 88% of these properties are sold on the MLS. In addition, it gives you comparables quite easily. I would recommend using a Realtor or better yet getting your license for your own access.

Logan Square is virtually impossible, look at Avondale or surrounding areas.

Im very familiar with Bridgeport,  looking right now there are 12 multi units under $400K.  Mostly 2 flats, which are also impossible to get good cash flow on.  

Sorry, this wasn't much help.