Chicago: North vs. South Side (Buy & Hold)

[Art Maydan]

I’m looking for a multi-unit to house hack in Chicago and had a low budget, so I was looking primarily on the South Side. We’re not big nightlife people, so I wouldn’t want to pay a hipster premium anyway. But safety and not being by busy streets (clean air & noise) are important. We were looking mostly in working class neighborhoods like McKlinley Park. We weren’t crazy about the types of houses we were seeing in our budget, but the cap rates were nice (10%+).

I got a raise and added my wife to the mortgage and now we can afford the North Side, which has nicer houses and neighborhoods. But the cap rates I’m seeing on nice multi-units are in the 6-8% range. We’re looking farther North for a more suburby feel and to avoid paying a hipster premium.

I’m now weighing cap rate versus quality of life. Down the road, when we buy another property and fully rent the current one, is there an argument for a nicer home on the North Side being a good investment when there are 10-15% caps on the South in decent, working class neighborhoods?

If you were looking for a buy-and-hold property in Chicago, but also had to live in it for a year with a wife and baby, where would you look?

Thank you!