Your Thoughts on Heart of Chicago and Little Village

[Unai La Salle]

Hi all,

I'm looking to invest in multi-units in the West Side for I see a lot of potential there.   Pilsen is my top choice but prices have risen and I am not seeing the kind of return that I like there.  I do see a few properties just west of Pilsen in Heart of Chicago that I find attractive number wise.   And further west in Little Village, a bit more properties that fall into my like category.

While I'm bullish on Pilsen, I'm not that familiar with the two nabes west of it.  What are your thoughts?  Any gentrification happening there?  Any new hip business moving there?  Any spillover from Pilsen?   Appreciate any insight from you guys.

Speaking of Pilsen, while I'm bullish, the gentrification process seems to be happening slower than I anticipated.  Anyone thought the same?

[Matthew Olszak]

Outside of the crime discussion, I think its also important to mention the different tenant pool in Little Village. These are certainly not meant to be all-encompassing comments, just some of my observations about the traditional tenants and landlords in the area:

1. A lot of your competition (other units for rent) are long-time local owners. Their rental pricing is based on the past or what they feel or how much they need, not any market analysis.

2. Most owners don't have a formal application process, and especially no fees.

3. Many owners don't have a lease and many tenancies are MTM.

4. Although the internet is becoming more popular, a lot of properties are only advertised by a for-rent sign in the window. Word travels fast. Using only the MLS and and agent will severely limit your exposure in this neighborhood.

5. On that same note, having a for-rent sign from an agency, vs. the black and orange home depot one, will also limit your exposure.

6. Checking credit and backgrounds is going to be challenging due to many tenants lacking a ssn. Finding applicants on Facebook can be very telling.

7. Large income to rent ratios won't fly. Many folks in LV are low income, and dedicate a huge portion of income to rent.

Again, these items aren't all encompassing or rules set in concrete by any means. More so advice that if you expect to rent a unit here 'by the book' with a $50 app fee, credit and background requirements, going through an agent and management company, etc etc, your pool of applicants will be extremely limited. It takes a different and more flexible approach to find the most profitable tenant.

I have noticed in the past year, there are a lot of people coming down from Humboldt Park, where they've been pushed out due to rent increases from the gentrification. There's been a lot more interest from investors and outside businesses like Starbucks and Panda Express as well. Both of those are great for the long-term outlook of the neighborhood.