Should a OOS investor get started with multi-family in Chicago?

Question

Hi all,

I am a new investor from Portland, Oregon, and I am looking to purchase a multi-family home out-of-state and live in one of the units. I started looking into Chicago IL because multi-families are quite popular there and its a pretty hot real estate market.

However, this would be my first property. Would Chicago be a good place to start investing in multi-family homes? How hard would it be to get started? And would it be more difficult than if I chose another state?

Thanks in advance.

Eric M. · Answer

"Chicago" is just too general a target. That can mean multi million dollar homes, condos or multi's renting for 5 figures on the north side or 25K 2-flats on the south side renting for 3 figures or section 8. The whole gamut. Some places you will get a 3 or 4 cap and hope for appreciation and rent increases and some places you will get a 13 cap and cash flow like crazy but your property will depreciate. There are many sub-markets.

You need to be more specific. I don't know that you could call our market "hot" but it is going ok. Are you aware of the very friendly tenant laws here?

Some neighborhoods have really been hurt during the riots and some haven't. The city is going to be looking at massive massive budget problems on the other side of Covid too. So taxes are a question.

Tim Sipowicz · Answer

Listen to the straight up Chicago Investor for sure!! @Mark Ainley. A lot of great insight, especially the episode with real estate agent Brie Schmidt. Maybe she can even be of assistance to you, she’s extremely knowledgeable when it comes to the Chicago Market

Laretta Young · Answer

Hello Jimmy,

I am also in the same boat.  I live in Los Angeles and would like to invest in either a single family home in the suburbs or multi-family unit within the city.  As @Sarita Scherpereel expressed, I too am biased as I have previously lived there for a number of years and loved it!  Like Sarita mentioned learning what neighborhood to start is really important.  I recently started listening to podcast started by I believe @Tom Shallcross (please correct me if I am wrong) called "Straight Up Chicago Investor" where they speak with investors on where they have had their success etc. in the Chicagoland area.  I also use the forums quite often and have it set to receive notifications when key words like "Chicago" are used; allowing me to learn experiences of Chicago investors.

Tom Shallcross · Answer

@Laretta Young - thanks for the mention! Yes, @Mark Ainley  and I started that (assisted by @Tony Angelos) for folks who want to dive deep into the different Chicagoland neighborhoods.

There are legitimate negative macro-economic factors that deter folks from Chicago, but when you break it down by neighborhoods, there are still tons of areas that have positive net migration, job growth and large enough spreads that more than offset our lovely tenant-friendly environment :).

Like any major city, you need to dive deep into your area to really understand the pros/cons of the investment.

Sarita Scherpereel · Answer

Hi Jimmy! I'm a bit bias because this is my market. But I grew up in Houston and I've lived in a few other states before settling here a 12 years ago. Chicago can be a competitive market especially during the spring market. Obviously, this year COVID change a lot of the "normal" conditions. Most investors like Chicago because of appreciation, high airbnb potential, easy airbnb city regulations and the ARV strategies for cashing out can be lucrative. Negatives are taxes are high and increase for a "windy" city, tenant laws strongly favor tenants and most buildings are over 100 years old. A seasoned realtor can guild you through those issues though. The biggest benefit for house hacking is you will work with the negatives better. You get a tax credit, you'll know your building and your tenants.

Chicago is a city of neighborhoods, so to speak in more specific terms it's helpful to know if you've narrowed down neighborhoods. If not, this is my general thoughts. Best of luck to you in your search!

Jimmy Lieu · Answer

Still looking for answer!

Kerry Noble Jr · Answer

take a look at central indiana......

Should a OOS investor get started with multi-family in Chicago?

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