10 Smart Tips for House Hacking in Chicago: Find Your Perfect Investment Property

[Jarret Jarvis]

House hacking is an incredible way to live affordably while building wealth through real estate. The idea is simple: purchase a property, live in one part, and rent out the rest to offset your mortgage or even generate profit. Chicago, with its vibrant neighborhoods and strong rental market, is a prime location for this strategy. Here are the top 10 tips to find the perfect house-hacking investment property in the Windy City:

1. Focus on Location

Chicago’s rental market varies widely by neighborhood. Areas like Logan Square, Lincoln Park, and Pilsen attract renters due to their trendy amenities and access to public transit. If a 2-bedroom unit rents for $1,800/month in these neighborhoods, you’re well-positioned to offset your mortgage.

2. Choose Multi-Unit Properties

Look for duplexes, triplexes, or properties with ADUs. For example, a $550,000 two-flat in Albany Park might bring in $2,500/month from the rented unit while you live in the other—covering most of your mortgage.

3. Understand Chicago Zoning

Chicago’s zoning regulations vary by ward. Verify that your property is zoned for rentals or ADUs. Renting a garden unit, for instance, could generate $1,200/month but must comply with city codes to avoid fines.

4. Evaluate Property Condition

Older Chicago buildings often have charm—but may come with hidden costs. Look for properties with updated roofs, electrical, and plumbing. Spending $15,000 on minor updates in a Hyde Park two-flat could raise the rental unit's value by $300/month.

5. Analyze Rental Income Potential

Run the numbers for your specific property. Suppose you buy a $700,000 three-flat in Avondale with a $5,000/month mortgage and rent out two units for $1,500 each. In that case, you’re living for $2,000 a month—while building equity in the home, benefiting from potential appreciation, and taking advantage of valuable tax write-offs!

6. Target Low Vacancy Rates

Chicago neighborhoods like Lakeview and West Town boast low vacancy rates, meaning fewer empty months. A vacancy could cost you $1,800 or more, so focus on areas with strong demand.

7. Seek Properties with Value-Add Potential

Invest in properties with room for improvement. Adding a washer/dryer to a $500,000 two-flat in Rogers Park could allow you to raise rents by $150/month, significantly boosting your ROI.

8. Prioritize Safety and Security

Renters value safe areas. A property near the 606 Trail in Logan Square could command $2,000/month, while the same unit in a less desirable area might rent for $1,300. Use crime maps and local insights to guide your search.

9. Emphasize Walkability and Transit Access

Properties near CTA train lines or buses rent faster. A unit within walking distance of the Blue Line in Wicker Park might rent for $2,200/month compared to $1,700 further away.

10. Explore Financing Options

Chicago offers excellent financing opportunities for house hackers. Use an FHA loan to purchase a $850,000 three-flat in Edgewater with just 3.5% down ($29,750). Rental income can cover most of your mortgage, letting you build equity quickly.

Why House Hack in Chicago?
With a dynamic real estate market, diverse neighborhoods, and high rental demand, Chicago is a fantastic place to invest in house hacking. Whether you’re eyeing a historic greystone in Bucktown or a classic brick two-flat in Irving Park, the Windy City offers endless opportunities to grow your wealth.