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Updated almost 3 years ago on . Most recent reply

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

@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."
- Paul De Luca
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