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Best Neighborhoods for Investment Opportunities in Chicago

Back in the 1920s, a group of researchers from the University of Chicago sat down and talked and divided the windy city into 77 community areas. Almost 100 years later, a dedicated team of property managers and financial advisors sat down and talked and realized that you might need a guide on investment opportunities in Chicago. That’s how this piece of writing was born.

Those with a wealth of experience in property management would agree that location of a rental property is what makes or breaks your buy-to-let business. In nearly all cases, an average apartment in the right neighborhood will pay off faster than a luxury one in the wrong neighborhood. So grab your chance to learn the hottest buy-to-let locations in beautiful Chicago.

In case you don’t know much about this city, here’s what you need to learn first. Chicago is considered the 9th most expensive American city in terms of rent – the median rental price for a 1-bedroom property is $1,970 per month. What’s more, it is the third most populous city in the US trailing only NYC and LA (today’s Chicago is a home to 2,720,546 people). And finally, it is believed to be the most beautiful city in the country – according to the subjective yet trustworthy opinion of Oprah Winfrey, Frank Lloyd Wright, and many others.

Is It a Good Idea to Invest in Chicago?

Absolutely. First and foremost, rental prices in Chicago have been constantly growing in the last 10 years (and there are grounds to assume the trend will gain momentum). Secondly, Chicago is the city of renters – over 54% of the local population are renting their homes. Thirdly, being a property owner in Chicago is relatively cheaper than being a renter.

“Yes, it is a great time for investment because there is still upside in some areas. There are certain neighborhoods in Chicago (West Town, Jefferson Park, Humboldt Park, and Garfield Ridge) that have not seen the price gains, but that is starting to change as it’s beginning to catch up the national average now.”

Carlson-Klein team from City Point Realty

“The Chicago rental market is strong. Corporate movement into the central business district continues to draw skilled labor closer to the city center. While Class A development in neighborhoods such as River North and the West Loop may be delivering more supply than the current demand can meet, Class B and C apartments just outside the city center continue to push rents and maintain occupancy over 95%.”

Victoria Michael, Broker Associate at Kiser Group

West Town

Median rental price: $1,570/mo
Median purchase price: $790,000

Put yourself in a renter’s shoes. What would be your major criteria for choosing a neighborhood? Chances are good that local amenities, crime rate, and livability score would top the list. Believe it or not, but West Town succeeds in each of these points. It’s got a high livability score – 77 out of 100, local crime rates are 60% lower than Chicago’s average, and it’s awarded A+ for the variety of amenities. The odds are good you’ll have plenty of tenant applications vying for your attention.

Uptown

Median rental price: $1,250/mo
Median purchase price: $840,000

Located right north of expensive Lakeview, this neighborhood is famous for its impressive jazz scene, close proximity to the beach, and relatively affordable housing. Given the ongoing increase in local real estate prices, this spot on the map of Chicago is sure worth your attention.

Edgewater

Median rental price: $1,100/mo
Median purchase price: $601,000

They say numbers speak louder than words, so let me use this rule on behalf of Edgewater. In fact, this neighborhood can boast the lowest rate of days on the market in the entire Chicago. It only takes 44 days for a property in this neighborhood to be sold. Now add to this local prices which increased by 32 percent in the last three years, and you’ll understand why farseeing landlords are massively flocking to the Edgewater.

Logan Square

Median rental price: $1,270/mo
Median purchase price: $525,000

Let me tell you how a dream of any property investor looks like. You come across a neighborhood with affordable resale price and above-the-average rental price. You buy-to-let and see a high return on investment before you even know it. Raise your hand if it sounds like a plan. The good news is that the opportunity is real. Numbers don’t lie, and they tell us that Logan Square can make your landlord business exceptionally profitable.

Jefferson Park

Median rental price: $1,050/mo
Median purchase price: $257,000

According to real estate experts, today’s Jefferson Park is a great buyer’s market. Compared to many other areas of the city, local housing prices are still affordable (and stable), and the neighborhood boasts of local amenities, great transport hub, and an array of parks. As real estate prices in Chicago are on the uptrend, any neighborhood struggling against the stream is definitely worth attention of a smart investor.

Humboldt Park

Median rental price: $1,050/mo
Median purchase price: $85,000

In case your budget is limited, it doesn’t mean you should give up on your investment dream. All you need is to take a closer look at Humboldt Park. As locals confirm, the area is getting plenty of new constructions, which means the housing market is on the rise (a growth of 33% in only three years is a living proof of this fact).

Near North Side

Median rental price: $1,683/mo
Median purchase price: $395,859

The area is well connected to Chicago’s center with an intricate system of public transportation. It has a vibrant social life and located in the walking distance from stores, restaurants, and entertainment. The neighborhood is considered affluent and unruffled. Despite the ongoing upward trend in the real estate prices, the neighborhood has not reached pre-crisis price level. Thus, it is a great opportunity to acquire superlative property at a reasonable price.

Near West Side

Median rental price: $1000/mo
Median purchase price:$86,000

Over the past decades, the area has seen an increasing amount of new housing development, and with that – new infrastructure and a new wave of yuppie residents. Jane Jacobs, the mother of modern urbanistic, cite Near West Side as an example of gentrification done right. The depressed neighborhood was upgraded to a well-maintained and balanced neighborhood. The area is filled with skilled professionals who are willing to trade work to upgrade housing, together with proactive well-led local political and social organizations.

Near South Side

Median rental price: $1300/mo
Median purchase price:$210,000

Take a closer look and this neighborhood. The median resale price changed. After the sharp decline in 2008, the prices bounce back to their pre-crisis level. Investing in this neighborhood is a business savvy decisions since it can accumulate significant return on the investment. Contrary to the prestigious area where prices fluctuate more or less in the same range, and you cannot expect a sudden decrease in property value. This former industrial area is currently undergoing gentrification, which can boost the real estate prices to a new high.

South Side and Southshore

Median rental price: $960/mo
Median purchase price:$230,000

Investors tend to overlook the South Side due to its past as heavily industrial area. However, it is a well-connected area with commuter rail,  interstate and is a part of largest redevelopment project introduced by the city of Chicago. The in a massive effort to revitalize the district.  Two European firms are contracted to develop a 440-acre site. They plan to construct around 20,000 modular, environmentally friendly homes together with spaces for commercial retail and office spaces, use to their advantage of marvelous views of the Chicago skyline the vast lakeshore frontage.

But What About Those Famous Locations?

If you are new to real estate investment and property management, you’re likely to think that owning a rental property in areas like the Loop, Lincoln Park, or Lake View is the least risky and most profitable thing that could ever be happened to you. However, monthly rental prices in these areas are only $200-300 higher, while resale prices are twice as high compared to West Town or Up Town (a median sales price in Lincoln Park is $1,578,000, and it’s only $790,000 and $840,000 in West Town and Uptown correspondingly).

Here’s what Victoria Michael says in this regard:

“The Chicago rental market is strong. Corporate movement into the central business district continues to draw skilled labor closer to the city center. While Class A development in neighborhoods such as River North and the West Loop may be delivering more supply than the current demand can meet, Class B and C apartments just outside the city center continue to push rents and maintain occupancy over 95%.”

Hopefully, this article helped you choose the right neighborhood for your next (or first) property investment. And in case you still have doubts, remember that Chicago is known for the friendliest people, most beautiful skyline, and the tenderest winds on planet Earth. Your prospect tenants won’t resist renting their next home in such a great city.

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