Chicago has been and continues to be a great city to invest in residential multifamily property. All levels of investors from mom and pop to professional firms participate in the large market, some with great success. The 70+ Chicago neighborhoods and differentiated building stock offer many living options to a diverse population. Here are 5 reasons to invest in Chicago real estate.
Broad Tenant Base
Chicago is home to a large population of renters representing the full socio-economic range. As an investor, you will want to choose a location that you are comfortable with and one that shows potential for price and rent appreciation over time. Investors in Chicago count on a large pool of renters to compete for available housing . Over the past two years, a relative shortage of rental housing has caused rents to increase substantially in many neighborhoods.
Upward Pressure on Rental Rates
The downturn in the housing market has been tough on property values but for investors who did not lose their properties to foreclosure, the upside has been an excellent rental market with average rents on the rise across the city. When people lose their homes they don't necessarily want to move out of the city or even the neighborhood they live in. Many one-time rental buildings were converted to condos in the early to mid 2000's. These condo conversion projects took available inventory off the market for renters that has not yet been replaced in most neighborhoods. As more renters enter a market with decreased supply, increased demand causes prices go up.
The Chicago Transit Authority (CTA) was reported by the Chicago Sun Times to have reached the highest level of ridership in 22 years in 2012. There were an estimated 545.6 million rides taken on the CTA in 2012. CTA rail ridership also known as the "L" was at the highest level in 50 years. Chicago neighborhoods are very accessible due to the availability, affordability and convenience of the L. It is the second largest rapid transit system in total track mileage in the US. Property values are highest within walking distance to public transportation as are rents. Renters and investors alike want to be near public transportation and there are multiple lines connecting the city and neighborhoods.
Entertainment / Recreation
There are no lack of opportunities for entertainment throughout Chicago, especially during the summer festival season when the different neighborhoods have an opportunity to showcase what makes them unique. From street fests to world class museums, attractions and dining, Chicago offers up anything and everything its residents could ask for in terms of entertainment. When it comes to recreation, Chicago tends to be somewhat limited in winter offerings but in the spring, summer and fall seasons Chicagoans take full advantage of Lake Michigan beaches and waterways, cityand state parks and idyllic neighborhoods. Some Chicago neighborhoods have the highest walkable scores in the country. Investors who buy in areas surrounded by attractions of leisure always have units in high demand during the rental season.
Property values in Chicago were hit hard and many neighborhoods are still struggling. Multifamily property valuations have fared much better over the past 12-24 months than other asset classes like single family homes and condos. Some neighborhoods like Logan Square, Avondale, Albany Park and Irving Park have seen 10%+ appreciation in the last year alone while stable neighborhoods that saw less depreciation over the previous years have had flat to moderate rates of appreciation. A big part of the uptick in pricing is supply and demand for income properties. The total month's supply of inventory in some neighborhoods is well below 3 months which indicates a seller's market. Ask any buyers currently looking to acquire and they will be the first to tell you that the market is moving fast, it is extremely competitive and prices are trending up.