One of the things that makes me proudest about my job is seeing our independently owned and operated HomeVestors® franchisees get rewarded for the hard work they put in. I see it over and over in the rental portfolios that they establish. Our investors spot a gap in the market and revamp “ugly homes” into properties that are perfect for a particular area or demographic. This is happening all across the country, but I have a strong feeling that Chicago is the next hotbed for investment opportunities.
Why? Because Chicago’s housing market isn’t looking great at the moment, but its rental market is booming. Rents are the 9th highest in the nation and Millennials are flooding into the city. With homeowners desperate to sell to escape Illinois’ high property taxes—and Millennials desperate for affordable housing—a sharp investor can spot the gap in the market and take advantage of it.
How Chicago’s Housing Market Opens the Door to Investors
Predictions put Chicago’s housing market at the bottom of the country’s 100 largest metropolitan areas. While house prices are expected to climb nationally by 3.9% and sales are projected to increase 2.6%, experts are anticipating prices to rise just 1.9% in Chicago with sales growing by 2.27%. Compare that with Phoenix, the top-ranked city in the study, where prices are expected to soar by a whopping 5.94%, so it doesn’t look good for folks in the Windy City. But why is the problem so bad?
The problem may come down to slow growth in two of the most significant factors that drive home sales: population and jobs. In fact, the city’s population is set to grow by just 1% in the year ahead, and unemployment sits at 6.5% compared to 4.9% nationwide.
Any investor worth their salt will know that high unemployment and low population growth (two of the factors that have the greatest impact on the strength of the housing market) tip the market in favor of buyers. Indeed, you only have to do a quick search on Zillow and see that over 10% of listings have been reduced in price to understand the opportunities available to investors. HomeVestors® franchisees, in particular, should be expecting to see a boom in business. With high property taxes in Illinois, owners might prefer a cash sale in order to move out quickly before the market turns against them even more. If you’re an investor or HomeVestors® franchisee in Chicago, now is the time to capitalize on a buyer’s market.
Turn Properties into Rental Units for Millennials
But what do you do with properties once you have acquired them? With a weak market, even the most experienced of investors will struggle to turn a profit by renovating homes for sale. That’s why I recommend investors turn their Chicago investments into rental properties that take advantage of the city’s booming rental market.
Is the market really that good? Nope—it’s excellent. Chicago has some of the highest rental rates in the country. From my experience, the median rate for a one-bedroom property hovers around the $1,800 a month mark. River North is probably the most expensive area with rent for a one-bed apartment costing $2,150 a month—but even this compares favorably to other cities such as San Francisco, where monthly rent for a one-bedroom apartment can be $3,330.
If you’re going to renovate your property before renting it, it would be wise to keep Millennials and young families in mind. Those aged 25-34 are now the biggest rental demographic in Cook County. Of course, much of the young workforce will be heading to multi-story apartment blocks in the city center, an area where you’re unlikely to find a suitable investment property. But that doesn’t mean you should rule out this demographic entirely. Instead, target those toward the higher end of the age range. Young professional thirty-somethings are all over the city who may be looking to move to the suburbs to start families but who either can’t afford a property or don’t want to commit to the area given the current market. Take advantage of this dilemma and deck out your rental property with amenities that Millennials look for—superfast broadband, smart technology, and energy-efficient appliances—and you’ll be set to take a slice of this lucrative market.
Sellers Go Directly to HomeVestors Franchisees
This advice is all well and good if you can find the right investment opportunities—but it’s not always straightforward. In fact, many investors I speak to find it the most difficult part of their job. But it doesn’t have to be. As a HomeVestors® Franchisee, you’ll be able to take advantage of our strong, national brand, We Buy Ugly Houses®, that sellers everywhere recognize as the number one home buyer in America. Our branding and marketing do the hard work to bring you the most promising leads to follow. Find out more about starting your own independently owned and operated HomeVestors® franchise by speaking to a member of our team today.
Each franchise office is independently owned and operated.