Chicago, IL · Member since 2016 · 8 posts · 0 votes
Hi there -- I'm very new to RE and BP, so apologies if common economic logic already answers this question.
I live in Chicago along the Blue line in Logan Square, which is a "hot" neighborhood. I see plenty of future growth in these parts, and am eager to buy an old 2-flat or 3-flat (what the rest of the country calls a 2 or 3-plex).
Everywhere I go in this neighborhood I see new condos springing up like concrete weeds, including several gargantuan buildings by the California train stop in an area that's mostly SFRs and small multis.
My question is this: Is the influx of new construction a great sign for the rising prospects of the neighborhood or is it just creating competition for older buildings and rents?
For example, say I buy a few units in the next year or two. If there are thousands of brand new, rental units down the street, will supply outpace demand?
Thanks for any insight from afar or from any Chicago/60647 pros.
Residential Real Estate Broker · Chicago, IL · Member since 2016 · 51 posts · 14 votes
10y
Hello,
I grew up around Logan Square. It's changed in the last 5 years. Heck, I was selling 2-3 flats 12 years ago trying to convince investors that it's was a great idea when prices were under $150k. Is it a great area? Yes it is. Am I surprised by the influx of major large development? Yes, but while some tenants will pay to be in these 24 hr doorman type with a gym, you have to offer something different. Not everyone want to live in a building with 50 other tenants. Those individuals will prefer a lower density say 2-3 unit building with a backyard and garage. Avondale which is right next door and is also by the blue line (Belmont) is another great option to stretch your dollar.
Residential Real Estate Broker · Chicago, IL · Member since 2013 · 64 posts · 17 votes
10y
Hi Daniel,
Think about the differences between those two things. New condo-like rentals with amenities will likely rent at a premium to your vintage two flat. You won't really be directly competing for those tenants. You will also have a parking pad and/or garage, a small yard and a neighborhood block feel. As more and more people convert these to single family homes, the two flat becomes more and more rare in this neighborhood and more desirable. Don't fret in my opinion..
My question is this: Is the influx of new construction a great sign for the rising prospects of the neighborhood or is it just creating competition for older buildings and rents?
An influx of new construction is a great sign for older buildings & rents IF an older building is updated with amenities like new construction. If you purchase an older building & do nothing to improve it you won't be able to command the rent or maintain the value.
An additional benefit of purchasing an older building is providing an option for converting the building to a Single Family. The values for SFRs in Logan Square are also going off the charts.
For example, say I buy a few units in the next year or two. If there are thousands of brand new, rental units down the street, will supply outpace demand?
There are plenty of articles on rental supply & demand in Chicago. You'll find a few w/ a simple internet search. You can even find specific articles regarding Logan Square.