Can someone give me a quick snapshot of Chicago's real estate market?

Asked by Beb0p, San Francisco, CA Tue Jan 14, 2014

I'm an out of state investor looking to diversify my portfolio. I love Chicago and I have so many questions I don't know where to start. I am looking for something in the low-mid $200k. Looking for primarily condo, 2 bed in an up and coming area or 1 bed in an established area. For starters, how is the real estate and also the rental market? A lot of overbidding? All Cash deal? Multiple offers? I've read that the rental market was very heated last summer but has cooled down considerably lately because of newly built inventory coming onto the market, is that true? Is Chicago a good place to rent out a condo? Does the demand out-weights supply?

Some neighborhoods that I've came across as being potentially good to invest are Wicker Park, Logan Square, West Town, Avondale, Lincoln Park, and downtown. Does that sound about right? Anyone has experience with the aforementioned neighborhood and would like to comment? Any other nabe suggestion? Looking forward to learn all ab

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16
Sari Levy, Agent, Addison, IL
Wed Jan 15, 2014
We really need to talk because there are a lot of moving parts here. For instance condo investing can be challenging because so many buildings don't allow rentals and then there is always the risk that they change the rules on you down the road and then you can't rent it out. If you want to talk you can call me at 312-738-0232.
Web Reference:  http://lucidrealty.com
1 vote
Bill J Delig…, Agent, Naperville, IL
Sat Feb 15, 2014
Are you an experienced investor? If not maybe you should consider an investment closer to where you live.
0 votes
JIM Michaels, Agent, Chicago, IL
Fri Jan 17, 2014
email me at jmichaels@remax.net for your research and assistance
0 votes
Mike Kravitz, Agent, Chicago, IL
Wed Jan 15, 2014
Hi,

I have 1 unit left you can buy in a strong area for under $200,000. You can do coprporate housing in the building, and get up to $2900 per month rent. Please call me if you would like more details. The return is phenomenal.

Mike
312-485-9868
0 votes
Beb0p, Home Buyer, San Francisco, CA
Wed Jan 15, 2014
Thanks for all the replies, they are very helpful indeed.

I have follow-up questions:

1. For condo investment, is it common for the condo board to change the rental rules? Is this a common issue in Chicago?

2. Pardon my ignorance but what is a 2-4 flats? Is it a multi-unit building?

3. Is there anything else you guys can think of that I should be aware of? Things like rent-control, high cost of insurance, earthquake, etc are some things that I encountered in other markets. I think each market has its own uniqueness, what is Chicago's?

4. Part of the reason I want to invest in condo is that the HOA takes care of the exterior maintenance and I don't have to think about it. I have never owned any property outside of tropical climate, does Chicago's winter weather makes the property more prone to breakdown/repair in your opinion?

Thanks in advance.
0 votes
1) The rental change has to be voted on by the owner as a bylaw change, but sometimes board do what they want to despite the rules. When there are changes they frequently grandfather in people who already own the units.

2)Yes 2-4 units

3)No rent control. It is what the market will bare. After 9-11 insurance went up near landmarks like John Hancock. Earthquakes are low in magnitude and very infrequent.

4) If you are not in the are a condos is a good choice for less hands on options. Keep in mine that each neighborhood in Chicago is different and sometime the same unit in a building is significantly different because of the views. Lake views are KING!!!
Flag Wed Jan 15, 2014
Joe Schiller, Agent, Chicago, IL
Wed Jan 15, 2014
this IS the deal. The agents here buy the best stuff. We all have 1-2 people we can basically write a contract for on the spot if something is a good value. I suggest that if your spending 200K you buy a 3 bed 2 bath condo in a 6 unit plus building somewhere near the red line probably in south uptown and rent it out to 3 roommates at 1800 a month with assessments at 225/month
0 votes
Matt Hoyt, Agent, Highland Park, IL
Wed Jan 15, 2014
The market is hot. Rents are going up & there is limited inventory. Property values are increasing. It's a sellers market. Limited supply and big demand.
Multiple offers are common. A worthy condo in the 200's will be a tough get for you. If recommend buy a two flat fix upper. Prob more hassle than you want but way more upside.
0 votes
Manuel Brown, Agent, Chicago, IL
Wed Jan 15, 2014
Dear Investment Buyer,

I attended the 2014 Economic Outlook held by the Chicago Association of Realtors. During the presentation I learned that what I have seen and doing for my clients is right on target. Chicago’s market has stabilized over the last two years and as long as employment figures continue to remain stable the real estate market in Chicago will continue to grow.

Right now the millennials are opting not to purchase but to rent due to what they have seen their parents and parents friends go through during the 2006 decline. New apartments being built are for the rental market. What does this mean for the average investor? If you can buy low and have cash (cash is king) you can get the best rental rates Chicago has seen since late 2011. When the market crashed I became very familiar with the rental market and have worked with numerous landlords and investors.

The current forecast by the experts such as, Steve Fifield, President & CEO, FRC Realty, Inc. who has built K2, Echelon, and Alta to name of few is predicting the rental market will stay hot for the next 3-5 years. How can this impact you? If you buy at a good price and rent for the top rental rates your investment will also be appreciating as the market continues to go up. “If” sales pick up as are predicted at the end of the 3 to 5 years rental rates will flat line and possible dip down. However, your investment is still strong as your appreciation on the apartment or building will have gone up and it may be good time to sell.

Work with a broker that knows the sales market as well as the rental market. What you don’t know about the rental market can hurt you.

Feel free to contact me with any questions.
0 votes
Jacqueline S…, Agent, Chicago, IL
Wed Jan 15, 2014
Very strong rental market, although things did slow down for still undetermined reasons in July. Rental market is peaking from April 1-September 1. As you can see from the winter we are having, Chicago people do not move in the winter. Plan your purchased for rental season, or be prepared to sit on it until February or March.

I specialize in Gold Coast, Streeterville and South Loop. To get more bang for you buck, consider South Loop. Very popular and lots of steals available still.
0 votes
Dirk Gould, Agent, Chicago, IL
Wed Jan 15, 2014
I just bought a 2 bed/2 bath condo for myself to rent out. In my 15 years as a real estate broker, I have not seen a better rental market. That said, inventory is very light. So it makes it a little more challenging to find the condo that has the compelling cap rate, cash flow, entry price, location and condition. You will often compete with all cash buyers and will likely be part of a multiple offer situation. But that is exactly why you hire an agent who specializes in analyzing investment properties and in the neighborhoods you seek. Feel free to contact me anytime if you want to discuss some ideas.
0 votes
Karen Feldman, Agent, Winnetka, IL
Wed Jan 15, 2014
healthy! This past week there was a line out front of a house to get into the sunday open- that home was priced well and was a good property but not a distressed sale. Inventory is low and things should start piling on now. Certain price ranges are more popular than others and prices are starting to creep up. The key is to get to a knowledgeable and connected agent for listings coming on before they hit the MLS. As in any market across the country, the good ones go fast.
hope this helps. If you need more info, visit my website, http://www.athomewithkaren.com
0 votes
Sari Levy, Agent, Addison, IL
Wed Jan 15, 2014
Hi,

In addition to the great answers provided by my peers, you might find the information we provide on the Chicago market interesting: http://blog.lucidrealty.com/chicago_real_estate_statistics/

We also provide an analysis on many of the neighborhoods you've questioned.

Find an agent that understands the economics of renting and is going to be willing to be proactive in working with you in your search.

The best of luck to you.

Sari Levy
Managing Broker
Lucid Realty
0 votes
Matt Laricy, Agent, Chicago, IL
Wed Jan 15, 2014
The market is hot. We have a lot of flash sales. (properties on the market for 24hrs or less) We dont have enough inventory to match the demand, and 35% of all sales are cash. Multiple bids are common.

With that being said, prices are still going up. Last year in the downtown area they went up 17.4% and its expected to rise not as much this year, but a good growth is the forecast. We went from a buyers market to a sellers market. The days of being jessie james and stealing places is done, but Real Estate is a viable asset that will do better than stocks and savings accounts.

Rents are good. Although I feel the prices will cool off a tad, for now, rents are very hot. Get a good Realtor to help you out. Its free to use their services.
0 votes
Philip Sencer, Agent, Chicago, IL
Wed Jan 15, 2014
It is somewhat hard to generalize, but yes, the market is stronger than any year since 2006 and supply is usually short and demand is very high so prices are trending up. The degree to which this is true varies by neighborhood/price point/property type. Lots of multiple offers and prices can go over list price because these A-hole banks tend to price below market more often than they use to although some sellers still price things too high.
What you want tends to be very popular and harder to find. We cannot talk about neighborhoods.
0 votes
Jorge Vega, Agent, Chicago, IL
Wed Jan 15, 2014
Hello,

The market in Chicago is hotter than ever. The low 200's are getting extremely difficult to find, especially in the loop. Many investors are now being priced out by first time home buyers as good investment deals become scarce. I am seeing certain investors enter the outskirts of the city and begin to renovate single family and multi family homes for long term rental profits.

If you want to be a part of this market then, "speak now or forever hold your peace" since we currently have active buyers in a low inventory market and expect worse conditions come spring.

Our company handles a majority of the foreclosure listing in the city and if you would like more assistance please feel free to contact me.
0 votes
Brian and Dan…, Agent, Chicago, IL
Wed Jan 15, 2014
Chicago is a great place to invest. I think the best place to start is by calling some Realtors and having a conversation about what your strategy is with this investment. The market is strong and every one of the aforementioned neighborhoods have their opportunities.

I would consider looking outside of condos at entry level 2-4 flats, single family detached, and even certain commercial storefront- and other types of props outside of the risk of condo board rental rule changes. .

Noticed you are from bay area- We have Illinois and California Brokerage licenses and are active in Chicago and San Fran bay area. happy to chat- familiar with both markets and some differences to consider. Brian 312 498 6886
0 votes
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