The Chicago real estate market can be challenging for new investors due to the constantly changing landscape. Yesterday’s up-and-coming neighborhood is now the most expensive market in the city, whereas previously untouchable boroughs are quietly gentrifying. When I mentor new Chicago-area investors, I always stress the importance of doing neighborhood research before buying a property.
I’ve seen too many eager investors get into bidding wars with more prominent firms in highly competitive neighborhoods like Logan Square and Wicker Park, making it impossible for them to earn any profit on their flip. In my opinion, if you want to find the best investment property in Chicago’s northwest, you need to follow the road less traveled.
The 3 Best Neighborhoods for Investment Property in Chicago’s Northwest
I chose these three neighborhoods for a few important reasons:
- They all have a relatively balanced market that doesn’t heavily favor either buyers or sellers. As a real estate investor, this is important because you don’t have time to wait for the market to swing in your direction—you need to buy and sell properties as quickly as possible. Buying during a buyer’s market—when the supply of homes is greater than the demand—means you can get a home for less money, but then generally you will have to compromise on the sales price. Conversely, if you buy during a seller’s market—when the demand for homes is greater than the supply—you’ll have to pay a higher price upfront, so even though you’ll sell it for more, you’re still less likely to achieve your optimal ROI. That’s why it’s best to invest in a neighborhood with a balanced real estate market. You can still find amazing deals by looking for distressed properties, and diamonds-in-the-rough since the prices aren’t artificially inflated. Then, you can sell the renovated property for its actual market value without worrying about artificial price dips.
- There’s less investor competition compared to other up-and-coming neighborhoods. I specifically avoided the hottest markets that are seeing huge price increases and a ton of investor interest. Unfortunately, neighborhoods like Avondale and Irving Park are now on the radar of every Chicago-area REI, which means you’d have to compete with larger firms and deeper pockets to snatch up any great deals. By comparison, finding excellent investment property in these Chicago northwest neighborhoods will be much easier because there’s less speculation, and prices are still relatively stable.
- Less investor competition usually means lower prices, which is the case for these neighborhoods. I chose areas where you can still find cheap old houses for sale at bargain prices. However, I also made sure the median sale prices in these neighborhoods are high enough that you can still achieve a great ROI on your flips.
Here are my picks for the best neighborhoods for investment property in Chicago’s Northwest.
- Portage Park
Portage Park is a vibrant and historic neighborhood located just to the north of Belmont-Cragin and west of Irving Park. Portage Park has maintained a very balanced real estate market despite its proximity to these rapidly gentrifying locales. There’s both an ample supply of available homes and significant demand for them, creating many opportunities for smart investors. Depending on the size, condition, and exact location, you could pick up a distressed home for anywhere from $65,000 to $300,000. That means there are flipping projects here for every comfort level, from beginners who are looking for an easy first deal, to experts willing to tackle large-scale renovations with the hopes of a big payout. The median selling price for a home in Portage Park is around $380,000, with the most expensive homes nearing the $1 million mark.
- Jefferson Park
Just to the north of Portage Park is another Northwest Chicago neighborhood with great investment opportunities. Jefferson Park is a quiet, residential neighborhood with a ton of history and some top-notch parks. The real estate market here is balanced, but skews slightly to favor buyers, which means there are a few more available houses than usual. In particular, there are quite a few historic apartment units and single-family homes on the market, some of which are selling for under $160,000. By comparison, the median selling price is hovering between $350,000 and $400,000, creating a lot of potential for savvy investors.
If we move east, another undervalued Northwest Chicago neighborhood is Dunning, which has many beautiful parks and fantastic public schools. Dunning is a much more affordable neighborhood to invest in than other favorites like Humboldt Park, so newer investors with less available capital can still take advantage of the market. You can easily find homes in moderate condition in the $150,000 range, with better deals available for those willing to take on a more significant challenge. The median selling price is about $350,000, with many homes creeping into the $600,000 range.
Finding Investment Property in Chicago’s Northwest Neighborhoods Made Simple
Now that you know my picks for the best neighborhoods to find investment property in Chicago’s Northwest, how do you go about finding great deals? There are a few common strategies, most of which you’ve probably already tried. You could buy lead lists, but they’re so widely used that you’ll have a hard time competing with other investors. Another option is to check legal notices about Chicago foreclosures in these zip codes, but that can be highly time-consuming, plus most of that info has already been circulated in lead lists before you get to it anyway. The most efficient way to find leads on investment properties in Chicago’s Northwest neighborhoods is to have distressed homeowners come to you. You can achieve this through word of mouth or direct mailers, but the easiest method is to join a national marketing campaign, such as “We Buy Ugly Houses®.”
I’m sure you’ve seen those billboards or heard their ads on the radio; that’s how I first became interested in learning about this widely recognized real estate marketing campaign. I realized that I could use the powerful “We Buy Ugly Houses” marketing strategy by becoming a HomeVestors® independently owned and operated real estate investment franchisee. After buying my first HomeVestors franchise and putting their marketing and lead-generation tools to work, I had distressed Chicago homeowners flooding my inbox with great investment opportunities.
Finding investment property in Chicago’s northwest neighborhoods is simple with HomeVestors®. To learn more about becoming an independent franchisee, contact HomeVestors® today.
Each franchise office is independently owned and operated.