What areas around the Chicago land Area good for Rentals?

Question

Hello Everyone,

I am no stranger to the Chicago Real Estate Market. I've seen some areas where Fix n Flips are happening even during this difficult time that is upon us.

However I am not experience on the rental market here in the Chicagoland area (yes I mean the suburbs not just the city). Can anyone tell me what areas are seeing people buy homes? In addition, can some one tell me what areas are the best rental markets?

Much gratitude and I appreciate the help.

Michael Taylor · Answer

I am a newbie, so take this with a grain of salt.  I have invested only in the city of Chicago and not the suburbs because of the taxes.  In my analysis of properties, the city is more profitable per door compared to similar buildings in the burbs.  Even in the "hood", the rents are strong and section 8 is even better.  I started investing with my first building (a duplex) in May of 2019, I have 10 units now and I just signed a contract for a 8 unit all on the southside.  Although I am from the city myself, I now live in the burbs.  So as I drive around and I look at some of the rough areas of town, I ask myself "who would want to live here"?  The answer is, "people who already live there".   So regardless of how the area looks, people have to live someplace so never under estimate the potential of what property could bring you.  As long as you provide a clean and modern building, without bugs and mice, tenants will live there.  For me, the "hood" is gold.  I am making great cash on cash returns compared to the suburbs or the northside.  My two cents.

Henry Lazerow · Answer

If looking at suburbs Aurora and Elgin offer high cashflow with middle class tenants. Prices are shooting up but if can afford a 4 unit still easy to get well over 1%. Had a repeat buyer over there grow his rental business quick off the cashflow now on 3rd building in a year.

Joe Mende · Answer

@Michael Taylor I just purchased a 4-unit in the Woodlawn area with that same mentality.  We’re going all section-8 there.  I have a friend that’s been killing it with all section 8.  No, I wouldn’t live there but as you said, people in the area will love to because it’s newly rehabbed.  Best of luck to you!  Let me know if you wanna connect sometime.

Bryen Blankenship · Answer

@Brian Geiger

I have investment properties in Matteson and Oak Forest both have been performing well for the last 4 years.

Quamal Burton · Answer

@John Warren understood! I'm an agent and investor. I have one 3 unit property that I purchased about 3 years ago, in which I house hack. I've been looking for my second property for about two years. I've had about 6 properties under contract in that time frame but all the deals fell through because my all in costs always exceeds the arv. I'm underestimating rehab cost and when my hud inspector provides me the work write up (I'm using a 203k loan) the rehab + purchase price is always far more than I anticipated at the walk through. All these deals have been from the MLS. So I guess my point is, the MLS has been no good at all for me! Your points were great though. I've scored winning some H&B offers they relationships, BUT the deal always fell through four me.

Paul De Luca · Answer

I’m an agent that has been house hacking a duplex in Berwyn for over a year now. When I move out and rent the other unit it will very likely meet the 1% rule, but I don’t think that’s common for Berwyn.

The 2-4 units tend to go very fast with multiple offers, even when overpriced with high taxes.

I’ve been looking for my next house hack in the western suburbs and NW Chicago and it’s been difficult to find something that makes sense.

Aaron Zimmerman · Answer

After talking with many people, it seems like Berwyn is a great spot to invest in. Large tenant pool and the multi-family inventory is plentiful.

John Warren · Answer

@Quamal Burton thats why I hate the 203k. They rarely work on 2-4 units. Maybe just save up and buy deals that are in worse shape?

John Warren · Answer

@Quamal Burton the MLS has been tighter for sure the past year or two. I do a direct mail, run a meetup and generally am plugged into the network so deals come from many different sources. I would still say that 80% of them come from the MLS though. Pretty much all of the buy side deals we do are competitive with multiple offers, so sometimes it is just about knowing the agent on the other side and having that pre existing relationship so your offer can get selected.

Bryen Blankenship · Answer

@Jaylan Bailey

Well not great because the taxes cut into profits, but it cash flows well enough. I'm exploring selling my priorities and moving to a different market due to the high taxes & decreasing population.

What areas around the Chicago land Area good for Rentals?

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