Chicago Real Estate Analysis & More

You’ll find our blog to be a wealth of information, covering everything from local market statistics and home values to community happenings. That’s because we care about the community and want to help you find your place in it. Please reach out if you have any questions at all. We’d love to talk with you!

March 15, 2022

Is It Better To Buy Or Rent In North Center?

Buy vs Rent in North Center

“Should I continue to rent? Or does it make more sense to buy?” 

This is a question that just about every adult will likely ask at some point in their lives, and one that has been asked for hundreds if not thousands of years. 

There are many, many factors that go into making this decision, both personal and financial. Even if you have the financial means to purchase, it still might not make sense from a lifestyle standpoint. 

Maybe your job status is in flux and you don’t know how much longer you’ll be in the city. Maybe you’re thinking about starting a family soon and not sure how that will change your priorities. Maybe you just like the flexibility that renting affords plus the lack of responsibility for when things inevitably go wrong. Maybe your rent is very low and you want to save money a little bit longer.

There are plenty of responsible, legitimate reasons to continue renting from a lifestyle point of view. 

From a financial point of view, however, owning your own home is almost always going to come up as the clear victor due to the equity you can build over time. 

In this series of articles (and videos), I am going to get into specific details of many of the most popular neighborhoods in the city of Chicago and break down the financial aspects of owning vs renting.

In this particular article I will be exploring the North Center neighborhood! I have analyzed 1, 2, and 3 bed condos and compared them to what it would look like if you rented a similar unit in the area. 

(The following condo financial estimates are compiled using a 30 year fixed rate, 5% down payment, 3.2% interest rate, 1% PMI, estimated property taxes and homeowners insurance, median HOA, median sales price current as of the end of 2021, and average growth rates over the past 5 years. Rent figures based on estimate of rental units comparable to quality of median priced condo)

This exercise is not intended to convey investment advice nor should it be applied to each individual property and personal situation. This is simply to provide a general overview of what these numbers could look like based on average market conditions. Please reach out to Jake Lyons with any questions. 

 

—---------------------------------------------------------------------------------------------------------------------------

For 1 Bedroom condos in the North Center neighborhood of Chicago, the median price point is at $249,900. The median HOA was $300, for an estimated total monthly PITI (principle, interest, taxes, insurance) of $1,938.74. 

A comparable rental unit in North Center would go for an estimated $1,529.00, for a difference of roughly $409.74

We found the growth rate of the condos over the past 5 years to be 1.25%. 

If this were to continue, in 5 years this condo would be worth approximately $265,854.83. 

After 5 years of making mortgage payments, the amount owed on your loan would be approximately $212,945.34.

This results in an equity position of approximately $52,909.49, or 19.90% of the home’s value.  

If you were to look at your monthly PITI payments as an investment and run the numbers as such (adjusting for the initial down payment), this would result in an annual rate of return (ROI) of approximately 6.27%.

To take it a step further.. Let's assume that the cost of rent ($1,529.00) is the baseline cost for living in the type of home you desire. If you were to look at the difference between PITI and rent ($409.74) as an investment that yields you $52,909.49 of equity in 5 years, that would be equal to an annual ROI of 32.9%!

Compare that to the cost of renting where, besides the utility of having a place to live, you gain nothing from an investment point of view. 

 

—--------------------------------------------------------------------------------------------------------------------------

For 2 Bedroom condos in the North Center neighborhood of Chicago, the median price point is at $390,000. The median HOA was $285, for an estimated total monthly PITI (principle, interest, taxes, insurance) of $2,842.46. 

A comparable rental unit in North Center would go for an estimated $1,983.00, for a difference of roughly $859.46

We found the growth rate of the condos over the past 5 years to be 2.94%. 

If this were to continue, in 5 years this condo would be worth approximately $450,827.34. 

After 5 years of making mortgage payments, the amount owed on your loan would be approximately $332,327.65.

This results in an equity position of approximately $118,499.69, or 26.28% of the home’s value. 

If you were to look at your monthly PITI payments as an investment and run the numbers as such (adjusting for the initial down payment), this would result in an annual rate of return (ROI) of approximately 10.42%.

To take it a step further.. Let's assume that the cost of rent ($1,983.00) is the baseline cost for living in the type of home you desire. If you were to look at the difference between PITI and rent ($859.46) as an investment that yields you $118,499.69 of equity in 5 years, that would be equal to an annual ROI of 38.40%!

Compare that to the cost of renting where, besides the utility of having a place to live, you gain nothing from an investment point of view. 

 

—----------------------------------------------------------------------------------------------------------------------------

For 3 Bedroom condos in the North Center neighborhood of Chicago, the median price point is at $540,000. The median HOA was $253, for an estimated total monthly PITI (principle, interest, taxes, insurance) of $3,794.10. 

A comparable rental unit in North Center would go for an estimated $2,623.00, for a difference of roughly $1,171.10

We found the growth rate of the condos over the past 5 years to be 3.79%. 

If this were to continue, in 5 years this condo would be worth approximately $650,340.66. 

After 5 years of making mortgage payments, the amount owed on your loan would be approximately $460,145.98.

This results in an equity position of approximately $190,194.68, or 29.25% of the home’s value. 

If you were to look at your monthly PITI payments as an investment and run the numbers as such (adjusting for the initial down payment), this would result in an annual rate of return (ROI) of approximately 12.82%.

To take it a step further.. Let's assume that the cost of rent ($2,623.00) is the baseline cost for living in the type of home you desire. If you were to look at the difference between PITI and rent ($1,171.10) as an investment that yields you $190,194.68 of equity in 5 years, that would be equal to an annual ROI of 46.45%!

Compare that to the cost of renting where, besides the utility of having a place to live, you gain nothing from an investment point of view. 

 

March 14, 2022

Is It Better To Buy Or Rent In The West Loop Of Chicago?

Buy vs Rent in Near West Side

“Should I continue to rent? Or does it make more sense to buy?” 

This is a question that just about every adult will likely ask at some point in their lives, and one that has been asked for hundreds if not thousands of years. 

There are many, many factors that go into making this decision, both personal and financial. Even if you have the financial means to purchase, it still might not make sense from a lifestyle standpoint. 

Maybe your job status is in flux and you don’t know how much longer you’ll be in the city. Maybe you’re thinking about starting a family soon and not sure how that will change your priorities. Maybe you just like the flexibility that renting affords plus the lack of responsibility for when things inevitably go wrong. Maybe your rent is very low and you want to save money a little bit longer.

There are plenty of responsible, legitimate reasons to continue renting from a lifestyle point of view. 

From a financial point of view, however, owning your own home is almost always going to come up as the clear victor due to the equity you can build over time. 

In this series of articles (and videos), I am going to get into specific details of many of the most popular neighborhoods in the city of Chicago and break down the financial aspects of owning vs renting.

In this particular article I will be exploring the Near West Side neighborhood! I have analyzed 1, 2, and 3 bed condos and compared them to what it would look like if you rented a similar unit in the area. 

(The following condo financial estimates are compiled using a 30 year fixed rate, 5% down payment, 3.2% interest rate, 1% PMI, estimated property taxes and homeowners insurance, median HOA, median sales price current as of the end of 2021, and average growth rates over the past 5 years. Rent figures based on estimate of rental units comparable to quality of median priced condo)

This exercise is not intended to convey investment advice nor should it be applied to each individual property and personal situation. This is simply to provide a general overview of what these numbers could look like based on average market conditions. Please reach out to Jake Lyons with any questions. 

—--------------------------------------------------------------------------------------------------------------------------

 

For 1 Bedroom condos in the Near West Side neighborhood of Chicago, the median price point is at $285,000. The median HOA was $440, for an estimated total monthly PITI (principle, interest, taxes, insurance) of $2,308.91. 

A comparable rental unit in Near West Side would go for an estimated $2,307.00, for a difference of roughly $1.91

We found the growth rate of the condos over the past 5 years to be 1.05%. 

If this were to continue, in 5 years this condo would be worth approximately $300,319.13. 

After 5 years of making mortgage payments, the amount owed on your loan would be approximately $242,854.82.

This results in an equity position of approximately $57,464.31, or 19.13% of the home’s value.  

If you were to look at your monthly PITI payments as an investment and run the numbers as such (adjusting for the initial down payment), this would result in an annual rate of return (ROI) of approximately 5.66%.

To take it a step further.. Let's assume that the cost of rent ($2,307.00) is the baseline cost for living in the type of home you desire. If you were to look at the difference between PITI and rent ($1.91) as an investment that yields you $57,464.31 of equity in 5 years, that would be equal to an annual ROI of 7541.76%!

Compare that to the cost of renting where, besides the utility of having a place to live, you gain nothing from an investment point of view. 

 

—--------------------------------------------------------------------------------------------------------------------------

For 2 Bedroom condos in the Near West Side neighborhood of Chicago, the median price point is at $399,450. The median HOA was $495, for an estimated total monthly PITI (principle, interest, taxes, insurance) of $3,114.43. 

A comparable rental unit in Near West Side would go for an estimated $2,996.00, for a difference of roughly $118.43

We found the growth rate of the condos over the past 5 years to be 1.15%. 

If this were to continue, in 5 years this condo would be worth approximately $422,929.93. 

After 5 years of making mortgage payments, the amount owed on your loan would be approximately $340,380.21.

This results in an equity position of approximately $82,549.72, or 19.52% of the home’s value. 

If you were to look at your monthly PITI payments as an investment and run the numbers as such (adjusting for the initial down payment), this would result in an annual rate of return (ROI) of approximately 6.05%.

To take it a step further.. Let's assume that the cost of rent ($2,996.00) is the baseline cost for living in the type of home you desire. If you were to look at the difference between PITI and rent ($118.43) as an investment that yields you $82,549.72 of equity in 5 years, that would be equal to an annual ROI of 118.43%!

Compare that to the cost of renting where, besides the utility of having a place to live, you gain nothing from an investment point of view. 

 

—----------------------------------------------------------------------------------------------------------------------------

For 3 Bedroom condos in the Near West Side neighborhood of Chicago, the median price point is at $660,000. The median HOA was $375, for an estimated total monthly PITI (principle, interest, taxes, insurance) of $4,703.01. 

A comparable rental unit in Near West Side would go for an estimated $3,951.00, for a difference of roughly $752.01

We found the growth rate of the condos over the past 5 years to be 0.95%. 

If this were to continue, in 5 years this condo would be worth approximately $692,032.94. 

After 5 years of making mortgage payments, the amount owed on your loan would be approximately $562,400.65.

This results in an equity position of approximately $129,632.29, or 18.73% of the home’s value. 

If you were to look at your monthly PITI payments as an investment and run the numbers as such (adjusting for the initial down payment), this would result in an annual rate of return (ROI) of approximately 6.13%.

To take it a step further.. Let's assume that the cost of rent ($3,951.00) is the baseline cost for living in the type of home you desire. If you were to look at the difference between PITI and rent ($752.01) as an investment that yields you $129,632.29 of equity in 5 years, that would be equal to an annual ROI of 42.83%!

Compare that to the cost of renting where, besides the utility of having a place to live, you gain nothing from an investment point of view. 

 

Sept. 15, 2021

Ultimate Guide To Multi-Family Properties In Chicago's Far South Side

By Jake Lyons, The Chicago Home Source / BHHS Chicago

 

If you’re reading this, odds are you are at least somewhat aware that investing in real estate is one the most surefire, tried and true routes to all kinds of financial freedom and wealth building. Whether you are working on your 1st property or your 1,000th, you will get something out of this report. 

 

My team and I have spared no expense or time to gather I believe the most comprehensive set of data for the city of Chicago that covers just about any metric most buy-and-hold multifamily investors will care about, with over 6,000 combined data points breaking each neighborhood down in terms of sales and rent prices, appreciation rates, average cap rates, revenue, cash on cash return, 1% rule, and more.

 

Our goal with this project is for it to be nothing short of the most thorough and helpful guide available for buying and selling 3-4 unit properties in Chicago!

 

In this article we have evaluated 3 and 4 unit properties in each neighborhood on the Far South Side of Chicago (Auburn Gresham, Avalon Park, Burnside, Calumet Heights, Chatham, Chicago Lawn, East Side, Greater Grand Crossing, Hegewisch, Pullman, Riverdale, Roseland, South Chicago, South Deering, South Shore, Washington Heights, West Pullman) and compared them. (We broke the south side down into the two parts, The South Side and The Far South Side, because of how vast and how many neighborhoods the south side truly has.)

 

We have done similar analysis based on the north side, the northwest side, the south side, and the west side. The southwest side did not have enough data to work with for multifamily properties as it is mostly single family homes.

 

As a former Series 7 licensed financial advisor, I am a big believer in real estate’s unrivaled power as an investment vehicle in terms of building equity, creative passive cash flow, reaping tax benefits, and so much more. I am also a bit of a nerd when it comes to the numbers. As my slogan suggests, I believe in being “data-driven and well-informed,” especially with something as potentially high stakes as investing in real estate.

 

There are many paths you can choose, of course. Fix and flip, buy and hold, BRRRR,  single family, 2-4 units, 5+ units, different areas, price points, features, etc. I may get into all of these topics in due time, but this article is geared at those specifically looking for 3-4 unit, buy and hold opportunities and considering doing so on the Far South Side of Chicago.

 

Methodology: The data referenced in this report is taken from various sources (MLS, InfoSparks, NAR, Rent-O-Meter, etc) and is based on the averages of a given metric such as sales price or rent rate in each specific neighborhood. All data is from properties closed or rented from the mid-point of 2021 through the midpoint of 2020, with data going back 5 years for appreciation estimates. 

 

Assumptions used: 8% vacancy rate, 8% management fee, 10% combined savings for maintenance and Cap Ex, property taxes at 1.5% of purchase price, insurance at 0.3% of purchase price, 20% down payment, 4% interest rate. Rehab estimates are not a part of these calculations. Do your due diligence. 

 

How to use this guide: Use it as a measuring stick. An apples-to-apples comparison from a very big picture view. Use it as one tool in your toolbag to help guide decisions on what areas you might want to focus more time on and what realistic goals might look like. 

 

How NOT to use this guide: Do not use this guide as a substitute for doing your own due diligence on individual properties. These figures are based on averages from large sets of numbers and do not accurately represent every property within that neighborhood. There are many factors that could result in a particular investment property being much better or much worse than the average metrics for that neighborhood or side of town. 

 

To get a look at what small multifamily properties are available in Chicago right now, visit https://www.thechicagohomesource.com/investments/

 

For a more in depth analysis on each individual property in Chicago as it becomes available, click here!

_________________________________________________________________

 

Let's get into the numbers! Before we get into the costs of the buildings themselves or any other more complex stats, perhaps it's best to start with the rents that you could expect in each of the different Far South Side Chicago neighborhood. This is important because, depending on what the layout is of bedroom count per unit, the rent the building is receiving will obviously determine the amount of revenue it's bringing in and how good of an investment it is. They all follow a similar, common sense pattern of 2 beds renting for more than 1, 3 more than 2, and so on.

Below is a breakdown of the cost of the buildings themselves, first of 3 flats and then of 4 flats, in the various neighborhoods within the Far South Side. You would expect the cost of a 4 unit to be much higher than a 3 unit since it is adding more potential revenue to the bottom line, however the increase we see is not necessariy in step with those expectations. You'll notice a few neighborhoods do not have any data for 4 unit buildings, this is simply becuase those areas don't have enough multifamily properties to analyze.

Cap rate is one of the most useful and prevalent metrics used by real estate investors. It is found by dividing the net operating income (gross operating income - operating expenses) by the cost of the building. Methods of financing do not change this number. The higher the number, the better your rate of return is in theory. This is not to be confused with "cash on cash return", which focuses on the amount of money you actually put into the deal. Using the assumptions of expenses mentioned above, this is the average expected cap rate per neighborhood for 3 unit properties (blue bars) and 4 unit properties (red bars).

Another metric that is popular in some investing circles, made famous by real estate investing community and website BiggerPockets.com, is called "The 1% Rule" which measures the percent that a building's monthly gross income is to it's purchase price. Though this more of a "guideline" than a rule, it can still be an interesting and useful means of comparison. Here is how the Far South Side neighborhoods on average stack up to eachother on this metric. In general, 4 unit buildings tend to have more bang for the buck, but are also quite a bit more rare to find.

Real estate investing is of course about more than just monthly cash flow. It is also about building equity in an asset based on that asset's appreciation over time. Therefore, the growth rate of a given area is a very important figure to consider. Below you'll see the growth rates of small multifamily properties annualized over the past 5 years (blue lines) and the growth rate of just the past 12 months as of the collection of this data (red lines), all broken down by Far South Side neighborhood.

 

 

Summary: Similar to its siblings to the north, aka "The South Side", the neighborhoods that do actually have multiunit buildings to choose from usually offer a good amount of appreciation and higher cap rates than can be found in other areas of the city. 

Posted in Guides
Sept. 15, 2021

Ultimate Guide To Multi-Family Properties In Chicago's South Side

By Jake Lyons, The Chicago Home Source / BHHS Chicago

 

If you’re reading this, odds are you are at least somewhat aware that investing in real estate is one the most surefire, tried and true routes to all kinds of financial freedom and wealth building. Whether you are working on your 1st property or your 1,000th, you will get something out of this report. 

 

My team and I have spared no expense or time to gather I believe the most comprehensive set of data for the city of Chicago that covers just about any metric most buy-and-hold multifamily investors will care about, with over 6,000 combined data points breaking each neighborhood down in terms of sales and rent prices, appreciation rates, average cap rates, revenue, cash on cash return, 1% rule, and more.

 

Our goal with this project is for it to be nothing short of the most thorough and helpful guide available for buying and selling 3-4 unit properties in Chicago!

 

In this article we have evaluated 3 and 4 unit properties in each neighborhood on the South Side of Chicago (Archer Heights, Armour Square, Bridgeport, Brighton Park, Douglas, Englewood, Fuller Park, Grand Boulevard, Hyde Park, Kenwood, Near South Side, New City, Oakland, South Lawndale, Washington Park, West Englewood, Woodlawn) and compared them. We separated the South Side from the Far South Side which will be in a different article. Why? Because the South Side is HUGE! and covering them all in one article wouldn't be helpful or even a fair comparison.

 

We have done similar analysis based on the north side, the northwest side, the west side, and the far south side. The southwest side did not have enough data to work with for multifamily properties as it is mostly single family homes.

 

As a former Series 7 licensed financial advisor, I am a big believer in real estate’s unrivaled power as an investment vehicle in terms of building equity, creative passive cash flow, reaping tax benefits, and so much more. I am also a bit of a nerd when it comes to the numbers. As my slogan suggests, I believe in being “data-driven and well-informed,” especially with something as potentially high stakes as investing in real estate.

 

There are many paths you can choose, of course. Fix and flip, buy and hold, BRRRR, single family, 2-4 units, 5+ units, different areas, price points, features, etc. I may get into all of these topics in due time, but this article is geared at those specifically looking for 3-4 unit, buy and hold opportunities and considering doing so on the south side of Chicago.

 

Methodology: The data referenced in this report is taken from various sources (MLS, InfoSparks, NAR, Rent-O-Meter, etc) and is based on the averages of a given metric such as sales price or rent rate in each specific neighborhood. All data is from properties closed or rented from the mid-point of 2021 through the midpoint of 2020, with data going back 5 years for appreciation estimates. 

 

Assumptions used: 8% vacancy rate, 8% management fee, 10% combined savings for maintenance and Cap Ex, property taxes at 1.5% of purchase price, insurance at 0.3% of purchase price, 20% down payment, 4% interest rate. Rehab estimates are not a part of these calculations. Do your due diligence. 

 

How to use this guide: Use it as a measuring stick. An apples-to-apples comparison from a very big picture view. Use it as one tool in your toolbag to help guide decisions on what areas you might want to focus more time on and what realistic goals might look like. 

 

How NOT to use this guide: Do not use this guide as a substitute for doing your own due diligence on individual properties. These figures are based on averages from large sets of numbers and do not accurately represent every property within that neighborhood. There are many factors that could result in a particular investment property being much better or much worse than the average metrics for that neighborhood or side of town. 

 

To get a look at what small multifamily properties are available in Chicago right now, visit https://www.thechicagohomesource.com/investments/

 

For a more in depth analysis on each individual property in Chicago as it becomes available, click here!

_________________________________________________________________

 

Let's get into the numbers! Before we get into the costs of the buildings themselves or any other more complex stats, perhaps it's best to start with the rents that you could expect in each of the different south side Chicago neighborhood. This is important because, depending on what the layout is of bedroom count per unit, the rent the building is receiving will obviously determine the amount of revenue it's bringing in and how good of an investment it is. They all follow a similar, common sense pattern of 2 beds renting for more than 1, 3 more than 2, and so on.

Below is a breakdown of the cost of the buildings themselves, first of 3 flats and then of 4 flats, in the various neighborhoods within the South Side. You would expect the cost of a 4 unit to be much higher than a 3 unit since it is adding more potential revenue to the bottom line, however the increase we see is not necessariy in step with those expectations. You'll notice a few neighborhoods do not have any data, this is simply becuase those areas don't have enough multifamily properties to analyze.

Cap rate is one of the most useful and prevalent metrics used by real estate investors. It is found by dividing the net operating income (gross operating income - operating expenses) by the cost of the building. Methods of financing do not change this number. The higher the number, the better your rate of return is in theory. This is not to be confused with "cash on cash return", which focuses on the amount of money you actually put into the deal. Using the assumptions of expenses mentioned above, this is the average expected cap rate per neighborhood for 3 unit properties (blue bars) and 4 unit properties (red bars).

Another metric that is popular in some investing circles, made famous by real estate investing community and website BiggerPockets.com, is called "The 1% Rule" which measures the percent that a building's monthly gross income is to it's purchase price. Though this more of a "guideline" than a rule, it can still be an interesting and useful means of comparison. Here is how the south side neighborhoods on average stack up to eachother on this metric. In general, 4 unit buildings tend to have more bang for the buck, but are also quite a bit more rare to find.

Real estate investing is of course about more than just monthly cash flow. It is also about building equity in an asset based on that asset's appreciation over time. Therefore, the growth rate of a given area is a very important figure to consider. Below you'll see the growth rates of small multifamily properties annualized over the past 5 years (blue lines) and the growth rate of just the past 12 months as of the collection of this data (red lines), all broken down by South Side neighborhood.

 

 

 

Summary: As you can see, a lot of the neighborhoods that make up the South Side are mostly single family homes and investing in multifamily buildings, at least those 2-4 unit buildings that count as residential multifamily, isn't really an option. For those that do have them, growth rates and cap rates are typically relatively high. 

Posted in Guides
Sept. 15, 2021

Ultimate Guide To Multi-Family Properties In Chicago's West Side

By Jake Lyons, The Chicago Home Source / BHHS Chicago

 

If you’re reading this, odds are you are at least somewhat aware that investing in real estate is one the most surefire, tried and true routes to all kinds of financial freedom and wealth building. Whether you are working on your 1st property or your 1,000th, you will get something out of this report. 

 

My team and I have spared no expense or time to gather I believe the most comprehensive set of data for the city of Chicago that covers just about any metric most buy-and-hold multifamily investors will care about, with over 6,000 combined data points breaking each neighborhood down in terms of sales and rent prices, appreciation rates, average cap rates, revenue, cash on cash return, 1% rule, and more.

 

Our goal with this project is for it to be nothing short of the most thorough and helpful guide available for buying and selling 3-4 unit properties in Chicago!

 

In this article we have evaluated 3 and 4 unit properties in each neighborhood on the West Side of Chicago (Austin, East Garfield Park, Humboldt Park, Lower West Side, Near North Side, North Lawndale, West Garfield Park, West Town) and compared them.

 

We have done similar analysis based on the north side, the northwest side, the south side, and the far south side. The southwest side did not have enough data to work with for multifamily properties as it is mostly single family homes.

 

As a former Series 7 licensed financial advisor, I am a big believer in real estate’s unrivaled power as an investment vehicle in terms of building equity, creative passive cash flow, reaping tax benefits, and so much more. I am also a bit of a nerd when it comes to the numbers. As my slogan suggests, I believe in being “data-driven and well-informed,” especially with something as potentially high stakes as investing in real estate.

 

There are many paths you can choose, of course. Fix and flip, buy and hold, BRRRR,  single family, 2-4 units, 5+ units, different areas, price points, features, etc. I may get into all of these topics in due time, but this article is geared at those specifically looking for 3-4 unit, buy and hold opportunities and considering doing so on the west side of Chicago.

 

Methodology: The data referenced in this report is taken from various sources (MLS, InfoSparks, NAR, Rent-O-Meter, etc) and is based on the averages of a given metric such as sales price or rent rate in each specific neighborhood. All data is from properties closed or rented from the mid-point of 2021 through the midpoint of 2020, with data going back 5 years for appreciation estimates. 

 

Assumptions used: 8% vacancy rate, 8% management fee, 10% combined savings for maintenance and Cap Ex, property taxes at 1.5% of purchase price, insurance at 0.3% of purchase price, 20% down payment, 4% interest rate. Rehab estimates are not a part of these calculations. Do your due diligence. 

 

How to use this guide: Use it as a measuring stick. An apples-to-apples comparison from a very big picture view. Use it as one tool in your toolbag to help guide decisions on what areas you might want to focus more time on and what realistic goals might look like. 

 

How NOT to use this guide: Do not use this guide as a substitute for doing your own due diligence on individual properties. These figures are based on averages from large sets of numbers and do not accurately represent every property within that neighborhood. There are many factors that could result in a particular investment property being much better or much worse than the average metrics for that neighborhood or side of town. 

 

To get a look at what small multifamily properties are available in Chicago right now, visit https://www.thechicagohomesource.com/investments/

 

For a more in depth analysis on each individual property in Chicago as it becomes available, click here!

_________________________________________________________________

 

Let's get into the numbers! Before we get into the costs of the buildings themselves or any other more complex stats, perhaps it's best to start with the rents that you could expect in each of the different west side Chicago neighborhood. This is important because, depending on what the layout is of bedroom count per unit, the rent the building is receiving will obviously determine the amount of revenue it's bringing in and how good of an investment it is. They all follow a similar, common sense pattern of 2 beds renting for more than 1, 3 more than 2, and so on.

Below is a breakdown of the cost of the buildings themselves, first of 3 flats and then of 4 flats, in the various neighborhoods within the West Side. You would expect the cost of a 4 unit to be much higher than a 3 unit since it is adding more potential revenue to the bottom line, however the increase we see is not necessariy in step with those expectations. You'll notice a few neighborhoods do not have any data for 4 unit buildings, this is simply becuase those areas don't have enough multifamily properties to analyze.

Cap rate is one of the most useful and prevalent metrics used by real estate investors. It is found by dividing the net operating income (gross operating income - operating expenses) by the cost of the building. Methods of financing do not change this number. The higher the number, the better your rate of return is in theory. This is not to be confused with "cash on cash return", which focuses on the amount of money you actually put into the deal. Using the assumptions of expenses mentioned above, this is the average expected cap rate per neighborhood for 3 unit properties (blue bars) and 4 unit properties (red bars).

Another metric that is popular in some investing circles, made famous by real estate investing community and website BiggerPockets.com, is called "The 1% Rule" which measures the percent that a building's monthly gross income is to it's purchase price. Though this more of a "guideline" than a rule, it can still be an interesting and useful means of comparison. Here is how the west side neighborhoods on average stack up to eachother on this metric. In general, 4 unit buildings tend to have more bang for the buck, but are also quite a bit more rare to find.

Real estate investing is of course about more than just monthly cash flow. It is also about building equity in an asset based on that asset's appreciation over time. Therefore, the growth rate of a given area is a very important figure to consider. Below you'll see the growth rates of small multifamily properties annualized over the past 5 years (blue lines) and the growth rate of just the past 12 months as of the collection of this data (red lines), all broken down by West Side neighborhood.

 

All of these neighgborhoods have seen substantial growth over the past several years, with some of them looking downright silly in how much they've grown and are continuing to grow. Of course, none of this any kind of guarantee that this will continue or have the same effect on individual properties, but the development being seen is still a reason for optimism as these west side neighborhoods continue to develop.

 

 

Summary: The West Side, starting from essentially the West Loop and extending out to Austin, is an area that has seen booming growth and showing no signs of stopping. The closer to the West Loop, in general the higher the property values and rents will be, sacrificing some profitability for more stability and less maintenance. The further west, again in general, the property values will be lower but the potential profits to be made will likely increase with a savvy, discerning eye. 

Posted in Guides
Sept. 15, 2021

Ultimate Guide To Multi-Family Properties In Chicago's Northwest Side

By Jake Lyons, The Chicago Home Source / BHHS Chicago

 

If you’re reading this, odds are you are at least somewhat aware that investing in real estate is one the most surefire, tried and true routes to all kinds of financial freedom and wealth building. Whether you are working on your 1st property or your 1,000th, you will get something out of this report. 

 

My team and I have spared no expense or time to gather I believe the most comprehensive set of data for the city of Chicago that covers just about any metric most buy-and-hold multifamily investors will care about, with over 6,000 combined data points breaking each neighborhood down in terms of sales and rent prices, appreciation rates, average cap rates, revenue, cash on cash return, 1% rule, and more.

 

Our goal with this project is for it to be nothing short of the most thorough and helpful guide available for buying and selling 3-4 unit properties in Chicago!

 

In this article we have evaluated 3 and 4 unit properties in each neighborhood on the Northwest Side of Chicago (Albany Park, Avondale, Belmont Craigin, Dunning, Edison Park, Forest Glen, Hermosa, Irving Park, Jefferson Park, Logan Square, Montclare, North Park, O'Hare, Portage Park) and compared them.

 

We have done similar analysis based on the north side, the west side, the south side, and the far south side. The southwest side did not have enough data to work with for multifamily properties as it is mostly single family homes.

 

As a former Series 7 licensed financial advisor, I am a big believer in real estate’s unrivaled power as an investment vehicle in terms of building equity, creative passive cash flow, reaping tax benefits, and so much more. I am also a bit of a nerd when it comes to the numbers. As my slogan suggests, I believe in being “data-driven and well-informed,” especially with something as potentially high stakes as investing in real estate.

 

There are many paths you can choose, of course. Fix and flip, buy and hold, BRRRR,  single family, 2-4 units, 5+ units, different areas, price points, features, etc. I may get into all of these topics in due time, but this article is geared at those specifically looking for 3-4 unit, buy and hold opportunities and considering doing so on the northwest side of Chicago.

 

Methodology: The data referenced in this report is taken from various sources (MLS, InfoSparks, NAR, Rent-O-Meter, etc) and is based on the averages of a given metric such as sales price or rent rate in each specific neighborhood. All data is from properties closed or rented from the mid-point of 2021 through the midpoint of 2020, with data going back 5 years for appreciation estimates. 

 

Assumptions used: 8% vacancy rate, 8% management fee, 10% combined savings for maintenance and Cap Ex, property taxes at 1.5% of purchase price, insurance at 0.3% of purchase price, 20% down payment, 4% interest rate. Rehab estimates are not a part of these calculations. Do your due diligence. 

 

How to use this guide: Use it as a measuring stick. An apples-to-apples comparison from a very big picture view. Use it as one tool in your toolbag to help guide decisions on what areas you might want to focus more time on and what realistic goals might look like. 

 

How NOT to use this guide: Do not use this guide as a substitute for doing your own due diligence on individual properties. These figures are based on averages from large sets of numbers and do not accurately represent every property within that neighborhood. There are many factors that could result in a particular investment property being much better or much worse than the average metrics for that neighborhood or side of town. 

 

To get a look at what small multifamily properties are available in Chicago right now, visit https://www.thechicagohomesource.com/investments/

 

For a more in depth analysis on each individual property in Chicago as it becomes available, click here!

 

_________________________________________________________________

 

Let's get into the numbers! Before we get into the costs of the buildings themselves or any other more complex stats, perhaps it's best to start with the rents that you could expect in each of the different northwest side Chicago neighborhood. This is important because, depending on what the layout is of bedroom count per unit, the rent the building is receiving will obviously determine the amount of revenue it's bringing in and how good of an investment it is. They all follow a similar, common sense pattern of 2 beds renting for more than 1, 3 more than 2, and so on.

Below is a breakdown of the cost of the buildings themselves, first of 3 flats and then of 4 flats, in the various neighborhoods within the North Side. You would expect the cost of a 4 unit to be much higher than a 3 unit since it is adding more potential revenue to the bottom line, however the increase we see is not necessariy in step with those expectations. You'll notice a few neighborhoods do not have any data, this is simply becuase those areas don't have enough multifamily properties to analyze.

Cap rate is one of the most useful and prevalent metrics used by real estate investors. It is found by dividing the net operating income (gross operating income - operating expenses) by the cost of the building. Methods of financing do not change this number. The higher the number, the better your rate of return is in theory. This is not to be confused with "cash on cash return", which focuses on the amount of money you actually put into the deal. Using the assumptions of expenses mentioned above, this is the average expected cap rate per neighborhood for 3 unit properties (blue bars) and 4 unit properties (red bars).

Another metric that is popular in some investing circles, made famous by real estate investing community and website BiggerPockets.com, is called "The 1% Rule" which measures the percent that a building's monthly gross income is to it's purchase price. Though this more of a "guideline" than a rule, it can still be an interesting and useful means of comparison. Here is how the northwest side neighborhoods on average stack up to eachother on this metric. In general, 4 unit buildings tend to have more bang for the buck, but are also quite a bit more rare to find.

Real estate investing is of course about more than just monthly cash flow. It is also about building equity in an asset based on that asset's appreciation over time. Therefore, the growth rate of a given area is a very important figure to consider. Below you'll see the growth rates of small multifamily properties annualized over the past 5 years (blue lines) and the growth rate of just the past 12 months as of the collection of this data (red lines), all broken down by north side neighborhood.

 

A few of these neighborhoods have enjoyed substantial growth just in the past year which well outpaces their 5 year annualized growth rates as the market has been hot recently. In my opinion I would expect long term results to be more in line with the blue bars than the red.

 

Summary: The Northwest Side has a lot going for it. Proximity to highways, public transit, O'Hare International (one of the busiest airports in the world), proud and diverse neighborhoods, culture, and more. It can also be a great place to invest rather you're looking for stability, cash flow, or appreciation. 

Posted in Guides
Sept. 15, 2021

Ultimate Guide To Multi-Family Properties In Chicago's North Side

By Jake Lyons, TheChicagoHomeSource.com / BHHS Chicago

 

If you’re reading this, odds are you are at least somewhat aware that investing in real estate is one the most surefire, tried and true routes to all kinds of financial freedom and wealth building. Whether you are working on your 1st property or your 1,000th, you will get something out of this report. 

 

My team and I have spared no expense or time to gather I believe the most comprehensive set of data for the city of Chicago that covers just about any metric most buy-and-hold multifamily investors will care about, with over 6,000 combined data points breaking each neighborhood down in terms of sales and rent prices, appreciation rates, average cap rates, revenue, cash on cash return, 1% rule, and more.

 

Our goal with this project is for it to be nothing short of the most thorough and helpful guide available for buying and selling 3-4 unit properties in Chicago!

 

In this article we have evaluated 3 and 4 unit properties in each neighborhood on the north side of Chicago (Near North Side, Lincoln Park, Lake View, Uptown, Edgewater, Rogers Park, North Center, Lincoln Square, West Ridge) and compared them.

 

We have done similar analysis based on the northwest side, the west side, the south side, and the far south side. The southwest side did not have enough data to work with for multifamily properties as it is mostly single family homes.

 

As a former Series 7 licensed financial advisor, I am a big believer in real estate’s unrivaled power as an investment vehicle in terms of building equity, creative passive cash flow, reaping tax benefits, and so much more. I am also a bit of a nerd when it comes to the numbers. As my slogan suggests, I believe in being “data-driven and well-informed,” especially with something as potentially high stakes as investing in real estate.

 

There are many paths you can choose, of course. Fix and flip, buy and hold, BRRRR,  single family, 2-4 units, 5+ units, different areas, price points, features, etc. I may get into all of these topics in due time, but this article is geared at those specifically looking for 3-4 unit, buy and hold opportunities and considering doing so on the north side of Chicago.

 

Methodology: The data referenced in this report is taken from various sources (MLS, InfoSparks, NAR, Rent-O-Meter, etc) and is based on the averages of a given metric such as sales price or rent rate in each specific neighborhood. All data is from properties closed or rented from the mid-point of 2021 through the midpoint of 2020, with data going back 5 years for appreciation estimates. 

 

Assumptions used: 8% vacancy rate, 8% management fee, 10% combined savings for maintenance and Cap Ex, property taxes at 1.5% of purchase price, insurance at 0.3% of purchase price, 20% down payment, 4% interest rate. Rehab estimates are not a part of these calculations. Do your due diligence. 

 

How to use this guide: Use it as a measuring stick. An apples to apples comparison from a very big picture view. Use it as one tool in your toolbag to help guide decisions on what areas you might want to focus more time on and what realistic goals might look like. 

 

How NOT to use this guide: Do not use this guide as a substitute for doing your own due diligence on individual properties. These figures are based on averages from large sets of numbers and do not accurately represent every property within that neighborhood. There are many factors that could result in a particular investment property being much better or much worse than the average metrics for that neighborhood or side of town. 

 

To get a look at what small multifamily properties are available in Chicago right now, visit https://www.thechicagohomesource.com/investments/

 

For a more in depth analysis on each individual property in Chicago as it becomes available, click here!

 

_________________________________________________________________

 

Let's get into the numbers! Before we get into the costs of the buildings themselves or any other more complex stats, perhaps it's best to start with the rents that you could expect in each of the different north side Chicago neighborhood. This is important because, depending on what the layout is of bedroom count per unit, the rent the building is receiving will obviously determine the amount of revenue it's bringing in and how good of an investment it is. They all follow a similar, common sense pattern of 2 beds renting for more than 1, 3 more than 2, and so on. Safe to say that 4 bed rent for the Near North Side is a bit of statistical outlier, but, there are quite a few of those apartments seeing that rent though they are likely in bigger high rises.

 

Below is a breakdown of the cost of the buildings themselves, first of 3 flats and then of 4 flats, in the various neighborhoods within the North Side. You would expect the cost of a 4 unit to be much higher than a 3 unit since it is adding more potential revenue to the bottom line, however the increase we see is not necessariy in step with those expectations.

 

Cap rate is one of the most useful and prevalent metrics used by real estate investors. It is found by dividing the net operating income (gross operating income - operating expenses) by the cost of the building. Methods of financing do not change this number. This is not to be confused with "cash on cash return", which focuses on the amount of money you actually put into the deal. Using the assumptions of expenses mentioned above, this is the average expected cap rate per neighborhood for 3 unit properties (blue bars) and 4 unit properties (red bars).

 

Another metric that is popular in some investing circles, made famous by real estate investing community and website BiggerPockets.com, is called "The 1% Rule" which measures the percent that a building's monthly gross income is to it's purchase price. Though this more of a "guideline" than a rule, it can still be an interesting and useful means of comparison. Here is how the north side neighborhoods on average stack up to eachother on this metric. In general, 4 unit buildings tend to have more bang for the buck, but are also quite a bit more rare to find.

Real estate investing is of course about more than just monthly cash flow. It is also about building equity in an asset based on that asset's appreciation over time. Therefore, the growth rate of a given area is a very important figure to consider. Below you'll see the growth rates of small multifamily properties annualized over the past 5 years (blue lines) and the growth rate of just the past 12 months as of the collection of this data (red lines), all broken down by north side neighborhood.

 

Growth rates on the north side in general tend to be relatively low, but steady. Unless you can find a rare fixer upper opportunity, usually investing in the north side is not a big appreciation play. Lincoln Park did have a surprisingly big movement in the past year, but I personally would expect that to regress back to the mean.

 

 

Summary: The north side has the highest barrier for entry on average in terms of price, but that also comes with the highest average rents in the city as well. Appreciation and cap rates are also comparably low, but areas tend to be more developed, taken care of, and less deferred maintenance for more stable assets. 

 

 

 

Posted in Guides
Sept. 15, 2021

Ultimate Guide To Multi-Family Properties In Chicago

By Jake Lyons, TheChicagoHomeSource.com / BHHS Chicago

 

 

If you’re reading this, odds are you are at least somewhat aware that investing in real estate is one the most surefire, tried and true routes to all kinds of financial freedom and wealth building. Whether you are working on your 1st property or your 1,000th, you will get something out of this report. 

 

As a former Series 7 licensed financial advisor, I am a big believer in real estate’s unrivaled power as an investment vehicle in terms of building equity, creative passive cash flow, reaping tax benefits, and so much more. I am also a bit of a nerd when it comes to the numbers. As my slogan suggests, I believe in being “data-driven and well-informed,” especially with something as potentially high stakes as investing in real estate.

 

There are many paths you can choose, of course. Fix and flip, buy and hold, BRRRR,  single family, 2-4 units, 5+ units, different areas, price points, features, etc. I may get into all of these topics in due time, but this article is geared at those specifically looking for 2-4 unit, buy and hold opportunities and considering doing so on the north side of Chicago (other parts of the city are coming soon!)

 

My goal with this project is for it to be nothing short of the most thorough and helpful guide available for buying and selling 3-4 unit properties in Chicago! In this article I break down each section of the city (north, northwest, west, southwest, south, far south) and how they all compare to eachother from an investor’s perspective. 

 

From there, each of those sections of the city is similarly broken down by neighborhood. 

 

My team and I have spared no expense or time to gather I believe the most comprehensive set of data that covers just about any metric most buy-and-hold multifamily investors will care about, with over 6,000 combined data points breaking each neighborhood down in terms of sales and rent prices, appreciation rates, average cap rates, revenue, cash on cash return, 1% rule, and more. 

 

Methodology: The data referenced in this report is taken from various sources (MLS, InfoSparks, NAR, Rent-O-Meter, etc) and is based on the averages of a given metric such as sales price or rent rate in each specific neighborhood. All data is from properties closed or rented from the mid-point of 2021 through the midpoint of 2020, with data going back 5 years for appreciation estimates. 

 

Assumptions used: 8% vacancy rate, 8% management fee, 10% combined savings for maintenance and Cap Ex, property taxes at 1.5% of purchase price, insurance at 0.3% of purchase price, 20% down payment, 4% interest rate. Rehab estimates are not a part of these calculations. Do your due diligence. 

 

How to use this guide: Use it as a measuring stick. An apples to apples comparison from a very big picture view. Use it as one tool in your toolbag to help guide decisions on what areas you might want to focus more time on and what realistic goals might look like. 

 

How NOT to use this guide: Do not use this guide as a substitute for doing your own due diligence on individual properties. These figures are based on averages from large sets of numbers and do not accurately represent every property within that neighborhood. There are many factors that could result in a particular investment property being much better or much worse than the average metrics for that neighborhood or side of town. 

 

To get a look at what small multifamily properties are available in Chicago right now, visit https://www.thechicagohomesource.com/investments/

 

For a more in depth analysis on each individual property in Chicago as it becomes available, click here!

View More
Posted in Guides
Aug. 18, 2021

To Sell, Rent, Or Re-fi? Guide To Monetizing/Exiting Your Property

Let’s assume that, for whatever your personal reason may be, you have come to a realization that you have a property (house, condo, multi-unit, etc) and you need to do something with it. Whether you’re looking to move, you want extra income or a cash infusion, you can no longer afford payments, you inherited something you don’t want or can’t care for, you are looking to upsize or downsize, or a mix of things, this is where you are. 

 

Okay, now what? What are your options? Who do you talk to? 

 

I’m going to attempt to provide, if not the exact answer, then at least a guide to lead you to it. 

 

To arrive at the right answer, we must begin with the right questions. 

View More
Posted in Guides
Aug. 4, 2021

5 Most Affordable North Side Chicago Neighborhoods

As the title suggests, the goal of this post is fairly straighfoward. That is, to determine what the 5 most affordable areas of the north side are in terms of average sales price over the past 12 months, starting from the midway point of 2021. 

For the sake of this analysis, I am using all single family homes (detached and attached, aka, houses, condos, and townhouses) that were resales (no new construction) and a traditional sale (no short sales or foreclosures). 

Despite the title, this is also technically ranking Chicago "areas" rather than individual neighborhoods. There are 77 "areas" in Chicago and well over 100 neighborhoods that fall under the umbrella of these larger areas. 

The pool of areas that qualify as "north side" are, in alphebetical order:

(For the most up-to-date stats and recently available properties in each of these areas, please visit that area's site page!)

Edgewater (Andersonville, Magnolia Glen)

Lake View (Lakeview, East Lakeview, Boystown, Wrigleyville)

Lincoln Park (Depaul, Park West, Sheffield, etc)

Lincoln Square (Bowmanville, Budlong Woods, Ravenswood, etc)

Near North Side (River North, Streeterville, Gold Coast, Old Town)

North Center (Horner Park, Roscoe Village)

Rogers Park 

Uptown (Buena Park)

West Ridge (Peterson Park)

View More
Posted in Top 5 Lists