|CHICAGO SOUTH SIDE INVESTMENT PROPERTIES
There is currently a great opportunity to purchase high yield
investment properties on Chicago's south side.
I am very familiar with the south side of Chicago. As a licensed Realtor, I
have access to many profitable investment properties, including: three
flats, four flats, multi-family (5+ units), mixed-use, and commercial
Investors love the south side of Chicago, because they can usually find
great properties that generate great net income. There is a high rental
demand on the South side of Chicago. As property values have been
decreasing, rental demand has been increasing. This market dynamic
is creating an ideal situation for real estate investors. While the media is
still painting a bleak picture for the real estate market, savvy investors are
buying properties left and right. Prices in some areas have dropped 40%
from their 2006 peak.
Due to the prolonged real estate downturn, there will probably be a
steady flow of foreclosures and bank owned properties hitting the market
for the next several years.
I can help you with purchasing and rehabbing your next investment
property. I can assist you every step of the way. I can also help you
quickly find tenants for your rental property.
Speaking of finding tenants, I am very familiar with the Section 8
program. For example, the Section 8 program may pay up to $1,300 for a
3 bedroom rental (depending on the market rent for the area). So, if you
have a 4 unit building, that has 3 bedrooms in each unit, you could
generate up to 5,200 per month in gross rental revenue! That's over
$62,400 annually! Even if annual expenses run at 40% of revenue, you
are still netting $37,400.
There are 4 unit properties out there going for $250K. In the above
example, an investor could easily earn a 15% return on their investment.
Talk about high cap rates!
If you have the resources to pay in cash, then you will have a distinct
advantage over buyers that need financing. The current market is best
suited for cash buyers that can close quickly!
*** Use the links below to find your next cash cow ***
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income, REO, bank owned, multi-family, multi-unit, mixed-use, three flat
Let's take a look at some real numbers. This analysis is based on the 9
month period ending Oct 4, 2013.
There were 261 closed transactions in the city of Chicago for multi-family
properties with 5 or more units. The median selling price was
$381,000. Properties ranged from abandoned buildings that needed
total gut rehabs to fully rented apartment buildings in high demand
The highest priced transaction came in at almost 8 million dollars!
It was a package of 58 condo units in the South Loop neighborhood.
The building development was called the "Opera Lofts".
It also included 62 parking spaces. Many of the units were rented out.
About 20% were vacant. Annual net income on this package was
$338,000. There was room to increase the income once the 11 units
were made rent-ready.
The cap rate came in at about 4%. Obviously the buyer felt good about
the potential profit that could be made on the back-end, because they
definitely didn't buy based on current profits. Maybe they will hold for five
to seven years, and hope that the condo market picks back up.
Here are the numbers for a property that was closer to the median selling price for
A 9 unit property was sold in the South Shore neighborhood for $390,000. The gross
rental income was $86,400. The net income was $58,501. The cap rate was a hefty
15%. A picture of this property is shown above.
From these three examples, you can see that cap rates can vary quite a bit from
neighborhood to neighborhood. Generally speaking, if you are in a neighborhood
that has good appreciation, the cap rate will be lower.
If you are in an area that has flat appreciation, the cap rate will be higher.
Areas that offer residents great amenities and great schools tend to appreciate
faster than areas that do not. Risk and Returns go hand in hand.
High Risk = High Return.... Low Risk = Low Return...
If you come across a deal where the return is not proportional
to the perceived risk, then don't even consider it.
The sweet spot is when you find a property in an area that is poised for growth but it
is not quite there yet. Then you can get in while the cap rates are still high. Or you
can find a property that needs work in an area that already has great appreciation.
Since it needs work, the price will be lower, and you will have the opportunity to
Well, I guess that is enough rambling for now :)
Hopefully, someone out there found this information useful.
If you are thinking about buying or selling an investment property in Chicago, please
send me a note.
If you find property analysis interesting, then check out my blog.
*** Use the links below to find your next cash cow ***
The 2nd highest priced property that sold during this time period closed
for a whopping $3,320,000. This was for a 31 unit property in the Rogers
Park neighborhood which is on the far North side of Chicago.
A picture of this property is shown above.
It is interesting to note that this was actually a short sale. When most
people think about short sales, they think about single family homes
and condos. But, now we are seeing more short-sales in the
A short-sale is where the owner is trying to sell the property for less than
what is owed on the property. This type of transaction will require
approval from the owner's lender and any other lien holders.
The gross rental income on this property was $409,872. The Net
Income was $299,205. The cap rate was 7.3%. This property was sold
in 7 months. So obviously there is a decent demand for multi-family
properties in Chicago.
This cool video shows you how to quickly analyze an investment property:
Chicago has one of the world's largest and most diversified economies,
with more than four million employees and generating an annual gross
regional product (GRP) of over $500 billion.
It is an efficient economic powerhouse that is home to more than
400 major corporate headquarters, including 29 Fortune 500 headquarters.
Among the most diverse economies in the nation, Chicago is a key player
in every sector from risk management innovation to manufacturing to information
technology to health services.
The income per capita is $25,219, which includes all adults and children.
The median household income is $45,393.
The unemployment rate in Chicago, IL, is 10.30%, with job growth of -0.38%.
Future job growth over the next ten years is predicted to be 28.94%.
Real gross domestic product in the Chicago area rose 2.4 percent, an
improvement from the 2 percent growth it saw in 2011.
The central downtown area has experienced a resurgence in recent years
with construction of major new condominium and Class A office buildings.
These include the 92-story Trump Tower Chicago, Lakeshore East development,
and the 300 North Lasalle office building. Since the recession, other projects,
like the planned 150-story 2000 foot Chicago Spire by architect Santiago Calatrava,
are now in limbo. Many city neighborhoods are gentrifying at a rapid pace as well,
including Logan Square, Pilsen, Uptown, Near Southside, and Rogers Park.
The massive expansion of O'Hare International Airport and reconstruction of the
Dan Ryan Expressway are also underway and will shape development patterns
for years to come.
Changes in house prices for the Chicago metropolitan area are publicly tracked
on a regular basis using the Case–Shiller index; the statistic is published by
Standard & Poor's and is also a component of S&P's 10-city composite index
of the value of the residential real estate market. Home prices in Chicago
advanced 7.8% in March 2013 over March of 2012.
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Real Estate Broker
RE/MAX Premier Properties
1205 N. Dearborn
Chicago, IL 60610