Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 54%
$32.50 /mo
$390 billed annualy
MONTHLY
$69 /mo
billed monthly
7 day free trial. Cancel anytime
×
Take Your Forum Experience
to the Next Level
Create a free account and join over 3 million investors sharing
their journeys and helping each other succeed.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
Already a member?  Login here
Chicago Real Estate Forum
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated almost 3 years ago on . Most recent reply

User Stats

1,872
Posts
2,380
Votes
Henry Lazerow
  • Real Estate Agent
  • Chicago, IL
2,380
Votes |
1,872
Posts

Why 2-4's have not fallen with rate increases and why they won't!

Henry Lazerow
  • Real Estate Agent
  • Chicago, IL
Posted

Lately, many 2-4 unit clients understandably ask me why prices are still going up with rate increases. I have sold 40 million seen a lot of 2-4's in Chicago and the answer is simple, supply has more impact in this niche on prices then interest rates. Chicago does not allow you to build new 2-4 unit rentals on the north side (not easily or profitibly atleast) and each year more and more 2-4 units are torn down/gutted into single families making that supply lower and lower by the year. The 5+ market cooled off almost immediatly as rates started increasing but have seen 0 impact on 2-4's. The 5+ multifamily space is a lot more sensitive to rates. 

What you can do about it? As always but even more important now you need to make the deal. I always recomend doing a cosmetic rehab (white quartz, white cabinets, bathroom vanity, add in unit laundry, paint) these can be done very affordably and often see a 50%+ increase in rents in the trendier house hack areas like avondale, logan square, albany park, etc. I did this on my house hack 4 unit in Edgewater. The kicker is you also create equity doing this strategy and can use that equity to get a HELOC to fund the next project which @Kristopher Toribio just did for his second house hack a 4 unit in Irving Park after finishing cosmetic rehab on a 2 unit house hack in Albany Park last year. Being able to run numbers using 10% down if owner occupant also helps boost returns vs 25% down traditional financing. 

Most Popular Reply

User Stats

1,773
Posts
1,429
Votes
Paul De Luca
  • Real Estate Agent
  • Chicago, IL
1,429
Votes |
1,773
Posts
Paul De Luca
  • Real Estate Agent
  • Chicago, IL
Replied

@Henry Lazerow you are exactly right. Not sure if you've seen this already but here is a great study on the topic called "Patterns of Lost 2-4 Unit Buildings in Chicago" published about a year ago.

One stat from the study: " Since 2013, Chicago has lost more than 4,800 2 to 4 unit buildings representing 11,775 rental and owner-occupied housing units or 4.2 percent of its stock of parcels and housing units."

business profile image
Magnus Properties LLC
4.9 stars
24 Reviews

Loading replies...