Chicago, IL · Member since 2017 · 29 posts · 6 votes
In everyone's opinion, what are the best up and coming neighborhoods in Chicago to invest in real estate, whether they be single families, multi families, apartment complexes, etc.
Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
7y
Chicago neighborhoods seeing strong gentrification (in no particular order).....
Avondale, West Logan Square, Hermosa, Humboldt Park (North of North Ave. or between Western Ave. and California Ave.), Albany Park, Irving Park, Rogers Park, West Edgewater, Pilsen/Heart of Chicago, Little Village, Mckinley Park, Bridgeport, East Woodlawn (east of cottage grove) and Bronzeville.
"In everyone's opinion, what are the best up and coming neighborhoods in Chicago to invest in real estate, whether they be single families, multi families, apartment complexes, etc."
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Define "best" persuant to your own criteria and let us know. Otherwise your question is hopelessly vague.
Chicago, IL · Member since 2017 · 29 posts · 6 votes
7y
Okay, to start, what are the best neighborhoods for cash flow where it's feasible to enter the market without putting a lot down. Is it possible to get a good CoCROI putting $50k down on a $250k property and getting enough cash flow to make it work? It seems that the properties in many areas are quite expensive and won't net the required cash flow to make the transaction work.
Okay, to start, what are the best neighborhoods for cash flow where it's feasible to enter the market without putting a lot down. Is it possible to get a good CoCROI putting $50k down on a $250k property and getting enough cash flow to make it work? It seems that the properties in many areas are quite expensive and won't net the required cash flow to make the transaction work.
Look at class C/D neighborhoods on the west side if your focus is on cashflow. Higher risk, but you can temper that as long as you have solid management in place and are realistic as to the conditions in those areas (IE you aren't going to get a renter with a 720 credit score). Managed properly with proper expectations, you can get a solid cocr % to make up for the lack of appreciation. PM or call me and we can discuss further to see how realistic your expectations are as to our market.
One thing to keep in mind - ANYONE can sell you a property that "meets" your requirements on paper, but in the C/D space you really really need to know the area and ditch those A/B expense percentages most of the proformas use.
Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
7y
Chicago neighborhoods seeing strong gentrification (in no particular order).....
Avondale, West Logan Square, Hermosa, Humboldt Park (North of North Ave. or between Western Ave. and California Ave.), Albany Park, Irving Park, Rogers Park, West Edgewater, Pilsen/Heart of Chicago, Little Village, Mckinley Park, Bridgeport, East Woodlawn (east of cottage grove) and Bronzeville.
Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
7y
In everyone's opinion, what are the best up and coming neighborhoods in Chicago to invest in real estate, whether they be single families, multi-families, apartment complexes, etc.
@Robert Regis The answer to this question depends on your strategy, timeline, risk tolerance & how much capital you have access to. If your risk tolerance is low then neighborhoods that have already gentrified or are starting to gentrify may make sense for you.
If you're willing to take a little more risk then neighborhoods right next to the ones that are changing dramatically may make more sense. Example: Look at the number of skyscrapers in the West Loop and you can see the transformation in front of your eyes. Drive one mile west and..... It's a higher risk into Garfield Park and you'll find a few pockets where investors are taking some risks with teardowns.
If you believe the new mayor is going to be successful with her plans then maybe invest in and/around where she's going to focus. I believe this is a long term play but... See article below.
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
7y
@Robert Regis the suburbs! I am pretty biased as all of my property is in Berwyn, Lyons and Cicero, but I love the location in the suburbs as we get the strong tenant pool but lower entry prices compared to most parts of the city. We also have similar rents to most areas, so the numbers often times work well.
Investor · Chicago, IL · Member since 2017 · 79 posts · 62 votes
7y
@Henry Lazerow I would disagree. You essentially created a list of already gentrified and mature markets. The chances of finding deals in those areas are SLIM and nearly impossible without having to do a HEAVY rehab.
Real Estate Agent · Chicagoland · Member since 2018 · 314 posts · 199 votes
7y
Going to second @John Warren and say the suburbs. Berwyn and Cicero have some good multi family opportunities, farther West there are more single family options in places like Downers Grove and Naperville. If taxes are annoying you check out Will county areas like Bolingbrook or Romeoville. One of my favorite things about Chicagoland is the diversity of opportunities.
Real Estate Entrepreneur / Investor · Chicago, IL · Member since 2016 · 688 posts · 367 votes
7y
I would say it depends on the rehab of the property. You mention 250k and putting down 50k. So keep in mind that doesnt include rehab which most MFHs being sold need heavily. Especially in the basements. With that being said....I would say the South Shore, Woodlawn, Avalon Park, and maybe some parts of Garfield Park. All of those areas have been increasing in price for the past few years and have been getting better slowly. They also arent that expensive(for now) due to the crime that may still linger on certain blocks. You would also get a very good cash on cash return or CAP rate depending on which you use to evaluate a deal. Some of the areas above mention are very nice areas but are far too expensive(IMO) and/or the cash on cash return isnt that great. Actually in some of those areas 250k wont get you anything in that area lol. Also...quiet as kept, please do your research a little bit on any area's mayor and city rules about real estate because some are a serious pain in the you know what to deal with......Thats one of many reasons some properties sit in certain areas.
Lastly, Englewood is getting better slowly as well. Maybe not now its not worth purchasing, but in a few years there will be more development there. Driving up prices and stabilizing the area's crime rate. More and more working class people are getting property there.
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
7y
@Anthony Duann those are all excellent places to buy your "forever home". You won't find much rental property in most of those areas. The Chicago housing stock is very rich in multifamily properties, but the construction back int he 50's and 60's ended near highway 294 to the west. To the North you can find the same building stock up to Skokie and Evanston and to the South it goes quite a ways. The issue people have when they think of Chicago is that many of the more desirable suburbs are further out, and they literally no 2-4 unit building stock. If you want multifamily, you will need to get closer to the city most likely.
Rental Property Investor · Chicago · Member since 2019 · 12 posts · 4 votes
7y
Robert , generally speaking unless your on the south side or west side of Chicago in Chicago returns would be lower . Currently market conditions are high taxes , inflated rental prices , and in some areas one has to rehab the home or Plex . Do your valuation over and over ! Buy the Location and don't ever expect appreciation in the Chicagoland market .. One must have positive cash flow with a lower amount of headache's otherwise one is a janitor and property manager losing money with a liability instead of a Asset -
@Henry Lazerow I would disagree. You essentially created a list of already gentrified and mature markets. The chances of finding deals in those areas are SLIM and nearly impossible without having to do a HEAVY rehab.
What neighborhoods would you say would be more inclined to have a better deal?
Investor · Chicago, IL · Member since 2015 · 154 posts · 91 votes
7y
@Robert Regis I think you can still find deals in Little Village, McKinley Park, Brighton Park, West Humboldt, Woodlawn, Jackson Park, Washington Park, Great Grand Crossing, etc but they are getting harder and harder to find. Logan, Hermosa, East Humboldt, Pilsen, Bridgeport, and Bronzeville deals are very hard to come by. If you like risk, start reading on the opportunity zones. There's a few billion (with a B) dollars that will be flowing into the south side over the next 5-10 years. Start buying around some of the more promising projects. Obviously a spec play and too risky for me!
Chicago, IL · Member since 2017 · 29 posts · 6 votes
7y
@Jason Marcordes Thank you for the information! If that is the case, how are people making money? Or are the cash flow margins in Chicago super slim and it's more of an appreciation market? Or is there more opportunity in the suburbs?
Investor · Chicago, IL · Member since 2017 · 79 posts · 62 votes
7y
@Jason Marcordes hit it on the head. The south and west neighborhoods are still providing deals but they are getting harder and harder to come by. Nearly all the properties on the MLS are asking too much and the problem is people are still buying! Most deals that have some faith of cash flow require HEAVY rehab. The problem is the properties have also reached a peak in appreciation.
You have to be very savvy, stick to your underwriting, and have construction knowledge to be successful at this point in time. The days of 2010 and stumbling into cash flowing deals are over which is why experienced investors are buying less. Its a long term play, don't get frustrated, and don't buy a bad deal because you can't find anything else. Be patient, network hard, increase your education, and find off-market opportunities.
Investor · Chicago, IL · Member since 2015 · 154 posts · 91 votes
7y
@Robert Regis Who said they're making money? I bet a lot of people thought they were making money in 06/07/08 until the bottom dropped out and they lost everything. It's easy to make money until the music stops. Then the good deals are sustained and everyone who paid too much, spent too much on construction, over-leveraged, was too aggressive on their pro-formas, etc gets wiped out. I would DEFINITELY not be buying for appreciation in Chicago right now....if it doesn't cash flow, don't buy it!
As @Rj D. mentioned there are deals out there but they are going to go to the people with the biggest/best network, the most experience, knowledge, access to capital, etc. This is a great time to invest in yourself so you're ready when the deals are more plentiful.
Property Manager · Chicago, IL · Member since 2016 · 69 posts · 43 votes
7y
if you are risk tolerant I would say areas like the south shore, Auburn Gresham, Morgan Park, Brighton Park, Garfield Park, Englewood. All of these neighborhoods seem to be the next to get gentrified/ you can still find good deals
@Robert Regis Who said they're making money? I bet a lot of people thought they were making money in 06/07/08 until the bottom dropped out and they lost everything. It's easy to make money until the music stops. Then the good deals are sustained and everyone who paid too much, spent too much on construction, over-leveraged, was too aggressive on their pro-formas, etc gets wiped out. I would DEFINITELY not be buying for appreciation in Chicago right now....if it doesn't cash flow, don't buy it!
As @Rj D. mentioned there are deals out there but they are going to go to the people with the biggest/best network, the most experience, knowledge, access to capital, etc. This is a great time to invest in yourself so you're ready when the deals are more plentiful.
This is very helpful, thank you very much. Is this a case of the market being too inflated? Do you anticipate the market correcting itself and regressing to the mean anytime soon?
Investor · Chicago, IL · Member since 2015 · 154 posts · 91 votes
7y
@Robert Regis Unfortunately I don't have a crystal ball but I did see an awesome presentation from fellow BP'er Neal Bawa a few weekends ago about that very topic. He said that Chicago is not as inflated as some of the other markets that have been red hot over the past 5 years and have far surpassed the pre-crash values. He didn't necessarily give specifics but he did say the general consensus is that the market will correct within the next 12 to 24 months and property in Chicago maybe only lose 10% of it's value. With that being said, the neighborhoods vary drastically and the more speculative the area, the harder it gets hit.
@Henry Lazerow I would disagree. You essentially created a list of already gentrified and mature markets. The chances of finding deals in those areas are SLIM and nearly impossible without having to do a HEAVY rehab.
You have a very different definition of "gentrified" than I do. The neighborhoods Henry listed are all in the 'up and coming' category as far as I'm concerned. Some have 'up and come' more than others...but I don't consider any of them fully mature. They're not Lincoln Park.
Investor · Chicago, IL · Member since 2017 · 79 posts · 62 votes
7y
@Jeff Burdick, @Robert Regis's original post asked particularly for the "best" neighborhoods to invest in. Assuming that Robert is a new investor, can we also reasonably assume that he doesnt have the capital , experience, connections, or track record to compete in certain markets? I would say so...
Now, let's take the markets that @Henry Lazerow mentioned. Please provide me with easily obtainable, light rehab, easy value add properties that would cash flow immediately, or even be a halfway decent investment to make these markets reasonable for a new investor to "find deals" in.
Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
7y
Albany park has 2 deals up right now that hit .9-1% after cosmetics. I offered on one and have a client offering on another so don't want to post address.
I have a 4 unit + illegal in Logan square east of kedzie nice part that with cosmetics hits around 1% under contract right now.
I just closed 6xxx n Hermitage myself 4 units market rate with cosmetics is $4200-4400 I got it $412,500.
These are all just kitchen/bath remodels and at the low rates of owner occupant loans on 30 year terms work well in the 4s right now with lender paid pmi. I personally think the north side tenants are better for beginner investors as easier to self manage and less issues. I understand we all have different strategies and full respect to everyone's opinions.
Investor · Chicago, IL · Member since 2017 · 79 posts · 62 votes
7y
I see you sold 6427 N hermitage which closed at $425,000 in AS IS condition and I am guessing you received $12,500 in credits?
The public information rent roll shows the building's rents were $1,814.00 with one owner-occupied unit. How is that anywhere close to the 1% model? Also its a fully electric building... No central air with ELECTRIC furnaces.... tell me how this is a 1% property with only cosmetic upgrades?