5 reasons to Buy Chicago Multifamily Investment Property
Chicago has been and continues to be a great city to invest in residential multifamily property. All levels of investors from mom and pop to professional firms participate in the large market, some with great success. The 70+ Chicago neighborhoods and differentiated building stock offer many living options to a diverse population. Here are 5 reasons to invest in Chicago real estate in 2013.
Broad Tenant Base
Chicago is home to a large population of renters representing the full socio-economic
range. As an investor, you will want to
choose a location that you are comfortable with and one that shows potential
for price and rent appreciation over time.
Investors in Chicago count on a large pool of renters to compete for
available housing . Over the past two
years, a relative shortage of rental housing has caused rents to increase
substantially in many neighborhoods.
Upward Pressure on
Rental Rates
The downturn in the housing market has been tough on property values but for
investors who did not lose their properties to foreclosure, the upside has been
an excellent rental market with average rents on the rise across the city. When people lose their homes they don't
necessarily want to move out of the city or even the neighborhood they live
in. Many one-time rental buildings were converted to condos in the
early to mid 2000's. These condo
conversion projects took available inventory off the market for renters that
has not yet been replaced in most neighborhoods. As more renters enter a market with decreased
supply, increased demand causes prices go up.
Public Transportation
The Chicago Transit Authority (CTA) was reported by the Chicago Sun Times to
have reached the highest level of ridership in 22 years in 2012. There were an estimated 545.6 million rides
taken on the CTA in 2012. CTA rail
ridership also known as the "L" was at the highest level in 50
years. Chicago neighborhoods are very
accessible due to the availability, affordability and convenience of the L. It is the second largest rapid transit system
in total track mileage in the US. Property
values are highest within walking distance to public transportation as are
rents. Renters and investors alike want
to be near public transportation and there are multiple lines connecting the
city and neighborhoods.
Entertainment / Recreation
There are no lack of opportunities for entertainment throughout Chicago, especially during the summer festival season when the different neighborhoods have an opportunity to showcase what makes them unique. From street fests to world class museums, attractions and dining, Chicago offers up anything and everything its residents could ask for in terms of entertainment. When it comes to recreation, Chicago tends to be somewhat limited in winter offerings but in the spring, summer and fall seasons Chicagoans take full advantage of Lake Michigan beaches and waterways, city and state parks and idyllic neighborhoods. Some Chicago neighborhoods have the highest walkable scores in the country. Investors who buy in areas surrounded by attractions of leisure always have units in high demand during the rental season.
Appreciation
Property values in Chicago were hit hard and many neighborhoods are still struggling. Multifamily property valuations have fared
much better over the past 12-24 months than other asset classes like single
family homes and condos. Some
neighborhoods like Logan Square, Avondale, Albany Park and Irving Park have
seen 10%+ appreciation in the last year alone while stable neighborhoods that
saw less depreciation over the previous years have had flat to moderate rates
of appreciation. A big part of the
uptick in pricing is supply and demand for income properties. The total month's supply of inventory in some
neighborhoods is well below 3 months which indicates a seller's market. Ask any buyers currently looking to acquire
and they will be the first to tell you that the market is moving fast, it is extremely
competitive and prices are trending up.
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Brent Hall is a broker associate with Jameson Sotheby's International Realty. Brent specializes in representing the interests of real estate investors, rehabbers and developers in Chicago. www.brenthallcs.com
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