Advice on first investment property in Chicago

[Mark Gast]

Hi, I am currently searching for my first investment property in Chicago and as far as I can tell it is hard to generate cashflow in the city.  It feels like most properties in the more 'hip' and even 'up and coming' neighborhoods have already accounted for significant appreciation in the asking prices.   I have lived in Chicago for 3 years now and I know that need to do more research so it would be greatly appreciated if anyone can point me in the right direction.  For what it is worth, I don't have a ton of experience in real estate.  I have owned one investment property in Michigan but currently I just have my primary residence in WP / Bucktown, no rentals.  

Also, I would love to hear any opinions on a property like the one linked below.  Ideally, I am looking for a cheaper multi-unit like this or I would be willing to start out with a cheaper single unit (<$300K) if it can generate cash flow.   

https://www.redfin.com/IL/Chicago/2049-N-Kedzie-Ave-60647/unit-1/home/13418191  

[Jake Fugman]

@Mark Gast  Are you planning on living in the property or operating at a pure investment?  A lot of "house hackers" in Chicago find it hard to sacrifice location in exchange for better returns.  For example, multi family properties in Wicker Park often have a very low cap rate since most buyers are counting on longer term appreciating VS immediate cash flow.  

If you dont plan to live in the property and thus are less sensitive on location I would recommend searching slightly further west/NW if you want to stay on this side of the city.    There are properties in Avondale, Hermosa, Irving Park, Jefferson Park that you can purchase for $500-600k and see positive cash flow of about $200/unit.  These returns can improve if you have the capital to do some value add repairs as well. 

The Kedzie unit you mentioned would be more of a long term appreciation play since you would likely break even after all expenses + debt service.  Additionally, since it looks to be turn key you arent leaving any room for forced appreciation.  I would recommend a property like this to someone that is planning to leverage a low down payment by house hacking to mitigate their cost of living.