I hate to drive and I hate paying property taxes. If it were up to me, I’d walk just about everywhere—work, the grocery store, bars, restaurants. Unfortunately, my home in a remote development makes it difficult to walk anywhere practical, with all apologies to my dog. That brings me to my next pet peeve. The tax collector mails this hefty bill to my house, and I often ask my friends: “What do I get for these payments?” My sons are grown and no longer attend public schools, my house has been robbed twice, and I’m still waiting for the city to install a street lamp so perhaps I can actually see a thief the next time they break into my car.
Needless to say, I understand why many people choose to rent in metropolitan areas. I often dream about finding a place that’s close to the job and shopping, shucking the yard work and the maintenance, and living my life. That’s what I had my mind set on when I investigated the best places to buy rental property in Chicago to grow my real estate portfolio.
Buying Rental Property in Chicago: Where Are the Best Places?
I do love the Windy City. There’s something about the constant activity that gets my adrenaline flowing. Through my real estate analyses, I found that I loved the potential for a sweet return on investment in downtown units, also. I tagged these three neighborhoods as ideal places to rent to others, and maybe even migrate there myself someday.
Situated between Lincoln Park and the Near North Side, Old Town architecture mostly reflects just what its name suggests—streets of picturesque brick and brownstone two- and three-story walk-ups. The neighborhood features many of the city’s oldest buildings, with some structures that made it through the Great Chicago Fire of 1871. Appealing to renters who desire a historic aura, new construction has nonetheless cropped up among the rowhomes. Spacious new luxury condominiums with an old-school feel are being constructed on North Clark Street at the northeast boundary of the village.
A quick study of rents in Old Town shows median prices for a one-bedroom ranging anywhere between $2,000 and $2,900 per month. Buyers can expect to pay an average of $469,000 for listings that represent more traditional dwellings as well as high-rise units. At the upper end of the spectrum, those North Clark St. condos—three-bedroom, three-bath units—list for about $2.4 million.
But, those are market prices and we all know that you don’t want to pay that. If you can find a distressed property to buy, renovate, and rent out, you’re likely to achieve a good cap rate. In this historical neighborhood, there should be plenty of properties that need a little updating.
A short walk to the financial district, West Loop occupies the area between I-90 and Wacker Dr. Like many up-and-coming Chicago neighborhoods, West Loop combines an industrial vibe with a chic menagerie of restaurants, boutiques, and art galleries. Greektown injects an ethnic flair into the village, accented by cultural establishments and the National Hellenic Museum which contains a repository of more than 10,000 literary pieces and 18,000 artifacts related to Chicago’s Greek and Greek-American heritage.
Median rents average about $2,300 monthly—That’s a good sum if you are able to buy an off-market property. Properties here spend a median of 67 days on the market and sales command about 11% more than the median list price. Upscale penthouse units with 3 bedrooms, 3 baths, and 1,668 square feet of living space cost tenants about $7,000 per month. The trick will be to find the leads in West Loop.
On the northern edge of the financial district, River North features some great commercial architecture and buzz. There’s the showcase for design and furniture purveyors inside the Merchandise Mart, a 25-story, 4.2 million square foot hub of commercial activity. One of the more impressive architectural landmarks— a 50-story tower designed by the famed German-American architect Ludwig Mies van der Rohe—sits at 330 N. Wabash Ave., a block from the Chicago River. Naturally, the neighborhood is also awash with upscale eateries and nightlife destinations.
River North has been a hotbed of new residential construction projects. Within just a few years, 13 new structures have been raised, including The Hensley, a 43-unit apartment building with a landscaped roof and fire pit. The neighborhood’s dwellings lean predominantly toward high-rise units, with a smattering of two- and three-floor row homes along Huron Ave. Median rents in the area come in at around $2,350 monthly. While luxury high-rises have been all the rage lately, I recommend focusing your investment energies on the row houses in this neighborhood for longer-term investments.
Finding Chicago’s Best Rental Properties
With thousands of rental units for sale in downtown Chicago, the knack for finding a good deal doesn’t come easy. After many trials and a few errors, I decided I needed assistance in finding rental properties that stood a good chance of enhancing my return on investment. It was only after my initial slew of acquisitions that I found the HomeVestors® franchisee opportunity—and that has provided returns in spades. HomeVestors®’ nationally-known and trusted “We Buy Ugly Houses®” marketing reaches distressed sellers across Chicago so I can get leads on rental properties before they are even listed.
Contact HomeVestors® today to set your urban Chi-town rental acquisition strategy in motion.
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