New York vs Chicago Buildings

[Account Closed]

Hey all, my name is Brianna, ive been on here before but am still very new to REI. I recently moved to chicago for work, but im from New York. In the next year ill be taking the leap and buying my first multi family unit. Originally i was all for investing here in chicago because its still a popular city and has potential (i think) but i love new york and was wondering what you all think about which market has the most potential for long term investing. What certain things should i be researching in order to see which market has the most potential? Such as population trends,new jobs coming to the areas and such. Also im referring to nyc and the boroughs not upstate as much but in the future id branch out to long island or westchester possibly. Please let me know any thoughts or comments, its all really appreciated.

[Basit Siddiqi]

@Account Closed

Chicago has been steadily losing its population since the 1950's.
In the 1950's the population was near 3,600,000 with it being close to 2,700,000.
However, that past information and not necessarily indicative of what is in the future for Chicago.

Per my research - median home sale price is $170,000.
You should be able to find a home to cash-flow at that price point.

I also heard that was a recent state income tax increase which made some wealthy individuals move away from the state.

I believe Chicago provides more opportunities to find cash-flow positive properties.

[Joe H.]

Chicago will offer a far higher long term return. Simply put cap rates in Chicago are much higher than in NYC because there is less competition. This is partially to do with Chicago's stagnant population (the city itself is holding steady, state is losing population), partially do to with the "unique" (read borderline corrupt) nature of dealing with the City of Chicago itself, and partly to do with Chicago just being more off the radar of national or internationally investors. 

The key here is to identify which areas are on a long term upward trajectory, which areas are stagnant, and which areas are having serious issues. I've been able to find several areas where my properties have multiplied in value quickly, but I'm sure not every deal here is so great. Start studying neighborhoods or suburbs and try to learn about what is going on in each submarket.

[Eric M.]

These articles might interest you. There are a lot of misconceptions about Chicago's population decline. Our population is shifting more than declining but we do have our share of issues.

Two-Graphs-Show-Why-the-Chicago-Area-Is-Losing-Population/

chicagos-shifting-population