As a real estate investor, I like to keep my finger on the pulse of public opinion when it comes to housing and neighborhoods. If people start flocking somewhere, it definitely raises the question of whether it’s an up and coming Chicago neighborhood that poses good investment opportunities. So it was a pleasant surprise when I saw that my old stomping grounds of Avondale was named as one of the Top 10 U.S. neighborhoods to visit now by Lonely Planet. But it’s not just Avondale that I see drawing attention as we head into 2018. I have my eye on several Chicago neighborhoods that I think will be worth investing in as we move into the New Year. Let me share what I know.
Where Are The Up and Coming Neighborhoods in Chicago?
We live in a large, diverse city and each neighborhood has its own special flavor. It’s easy to find information on how Chicago’s real estate market is faring as a whole, but you should be drilling it down to the specific neighborhoods that hold the most investment opportunities. With each of these listed here, be on the lookout for the ability to purchase at a reasonable price-point, add value to the property, and either sell or rent with good margins.
Let’s start by looking at my old neighborhood of Avondale. With Lonely Planet’s backing, this northwest neighborhood could be a hotspot for investment in the year ahead. Avondale has a large working-class population and a mix of condos, bungalows, and two-flats. It may be further out of The Loop than some people like, but the area does benefit from good transport links. Besides, cheaper prices and rents could draw out Chicago’s swelling population if gentrification continues up Milwaukee Avenue.
Neighboring Roscoe Village has already drawn attention from young couples looking to move out of the city center, but there is still plenty of time for investors to get involved in the action. This neighborhood is full of single-family homes in need of some TLC to make them more inviting to Chicago’s Millennial generation. Prices here are just as cheap as Avondale, with buyers able to pick up “ugly homes” for very reasonable prices. Rental rates are nothing to sniff at either, and landlords can expect to achieve a good cap rate.
Much like the Chicago property market of late, the popularity of Pilsen seems to fluctuate rapidly. It started making a comeback in 2017, however, and I’m expecting this southwest neighborhood to blossom in 2018. Pilsen boasts an array of single-family homes and multi-family buildings. It is also home to the University of Illinois at Chicago and the UIC Medical District, so there’s a ready pool of students and young professionals as renters for the investors with a buy-and-hold strategy. Median sales prices come in at around the $250,000 mark while median rents hover at around $1,800. If you find an investment opportunity here, you won’t have any trouble making a good margin whether rehabbing and selling or renting it out.
The Best Chicago Housing Sectors to Look Out For
Although Chicago is still the only global financial center with an undervalued housing market, we have been seeing a slow but steady rise in prices over the last few years and the Chicago real estate forecast is looking up for most investors. Of course, the luxury sector has been over-built recently and, with property taxes on the rise, it’s probably not the safest bet. But the affordable and mid-priced housing markets remain strong, especially for those who want to buy, renovate, and sell.
For investors like me who like to give something back to the community while making a profit, “ugly houses” should be your target. In the long run, these older, smaller homes offer a much better return on investment. The rising property taxes are likely to pinch many of the older neighborhoods more strongly as most of the homes have not experienced tax increases in many years. The recent revaluation will give residents a sticker shock and they may be looking to sell quickly and take a discount on the full market value. This leaves enough budget to rehab the place into the dream property for Chicago’s growing Millennial population who is moving in.
Finding the Right Leads
There are a couple of sources you can use to find distressed properties in Chicago. Chicago’s forfeiture program and the Cook County Land Bank Authority are frequently cited as great hunting spots. But an influx of investors has made it increasingly hard to find a good deal. In the last couple of years, I’ve shunned these kinds of programs completely.
Instead, I have leads coming to me looking for a quick and straightforward sale. As an independently owned and operated HomeVestors® franchisee, I’m able to leverage the nationally-recognized “We Buy Ugly Houses®” brand to my advantage. Marketing this brand has helped HomeVestors® franchisees like me close on over 75,000 homes since 1996.
If you’re looking to find distressed properties in these neighborhoods, speak to HomeVestors today.
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