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!

[Brie Schmidt]

I have clients that buy all over the North Side.  If you PM me your email I can send you a list of properties I have analyzed over the last year so you can get an idea of what numbers to expect.

While the caps are lower in the North side, the appreciation is higher.  I have looked at every single 2-4 unit listing in the past 5 years so I see a lot of trends in my head.  It still blows my mind how much prices have increased over the past few years with no signs of slowing down.  I have also seen neighborhoods transform pretty rapidly.

I do not know the south side very well, but I talk to a lot of investors and there are good neighborhoods.  I don't know them all but I would find an agent who knows the area well.