South Chicago multifamily apartment market

[Wai Chan]

I have invested in both Dallas and San Diego but I am now looking for area with better return. I have just started studying the South Chicago multifamily apartment market. I have looked at a few deal (6 units+) around U. of Chicago (zip code: 60649, 60637). It seems that almost all deal can achieve 10% cap rate with 20%+ cash on cash return. The number on paper looks pretty good. However, I am not sure the turn over rate and rental demand on these area. I have just read the report from Freddie Mac and it seems that the vacancy is pretty low and the rent increase is decent (http://www.freddiemac.com/multifamily/pdf/mf_2017_...)

Also looks like rent in South Chicago is pretty low. I see the average rent/sq ft runs about US 0.5/0.6. You pay only about US1100/month for a 2000 sq ft 3 bedroom 2 bathroom apartment or US650 for a 2 bedroom/1 bathroom. That sounds extremely affordable taken into account that minimum wage will increase to US13/hour in 2019. Looks like to me risk is low for rental.

A few questions I have in mind:

1. I have heard a lot of bad stories about South Chicago so I want to make sure I am picking the right zip code.  Could you share some area which I should look at? Good cap rate but also a small appreciation over years? I am not looking at the best cap rate as I don't want to deal with very bad neighborhood.

2. What size of apartment is the easiest to rent out? 2 bedroom/1bathroom?  

3. How do I calculate the property tax in Chicago? Is there way I can find the tax rate for different zip code?

4. What would be other big expense beside property tax? Is insurance expensive in Chicago?

5. Anything I need to be careful or take into account of when investing MF in South Chicago?

Thanks in advanced.

[Elbert D.]

it's actually very possible.....many investors(some here from BP) have contacted me about setting up an infrastructure to invest in Chicago and or Indiana. As long as you have a property manager who is good with finding quality tenants you should be fine. The same goes for rehabbing a rental or fox and flip as long as out of state and or international investors can use a rehab team here in Chicago and or Indiana they should be fine. Pics and videos are taken, the investor is also free to come look at the work that was done as well as enjoy their stay downtown. It's plenty to do downtown Chicago. This is an unbiased opinion of mine. I'm from here so I pretty much did everything lol. But as long as you have people on the ground or business's systems in place that's all that's matters.