When you think about real estate in Chicago to rent or buy in, you’ve probably got a pretty good picture of what the more expensive neighborhoods look like: high-end boutiques, unique, trendy restaurants, and sharp looking homes, condos, and apartments. You’re not wrong—these highly sought after lifestyle amenities are what make some neighborhoods so hot. But when it comes to buying and renting, there are some other reasons why certain areas of Chicago cost what they do. Learning what tenants are looking for (hint: it’s not only stainless steel appliances and marble countertops) will help you make the best decisions about where to purchase investment property or rental units.
Neighborhood Growth
Over time, the vibe of different neighborhoods changes, causing fluctuation in things like how much homes are valued at. As a property owner or landlord, it’s natural to want to get the most return on your investment, so purchasing properties in up-and-coming neighborhoods is generally a great plan. An increase in the cost to rent or own in a neighborhood can often be attributed to the amount of—and the type of—development happening in an area. If more restaurants, newer apartment buildings or homes, and other interesting hotspots are being built up in a certain area, it’s safe to assume that those neighborhoods will soon cost more to live in, and in turn, will cost more to rent or own property in.
Location, Location, Location
Of course, where an apartment, condo, or home is located in Chicago will also dictate how much it will cost. Property owners and landlords know that the closer a home is to L stops, the more sought after it will be—Chicago is a city full of commuters young and old, and getting to school or work conveniently is a priority that a lot of renters and owners have when choosing where they live. For instance, though neighborhoods like Rogers Park have a lot to offer, they’re further away from the center of the city, and it can take longer to get places from there. The same can be said for most any neighborhood on the outskirts of the city—the longer it takes to get somewhere, the less popular the area is, generally speaking.
What’s Happening?
Aside from simple proximity to transportation, people will be looking for what they can do in their neighborhood without getting on a train or bus. In other words, what Chicago events take place? For example, in neighborhoods like Bucktown and Wicker Park, the Do Division and Wicker Park Fests are a popular fixture every summer, and for those who already live in the area, it’s a convenient way to spend a weekend. In River North, plenty of nightlife options are attractive to people who love checking out the latest bar, nightclub, or restaurant. When considering where to purchase investment property, property owners and landlords should consider what their potential future tenants will be looking for and make decisions accordingly. In order to get the best return on an investment, you’ll want to be able to offer your potential renters something they find value in.
How to Stay Ahead of the Curve
Naturally, purchasing property that is in a popular neighborhood will mean that you’ll likely have no trouble renting it. But as a landlord or property owner, it’s only natural to want to get a great deal on property as well as be able to make the most of your investment. Paying a high cost upfront can mean spending a lot of time trying to keep up with the competition—working very hard for marginal returns. Earning more on your investment means looking at up-and-coming neighborhoods that don’t yet have the numbers you’re looking for, but will very shortly.
Take a look at a neighborhood like Logan Square. A decade ago, tenants shied away due to lack of development. Five years ago, renting in Logan Square was a popular choice with younger, “artsy-type” tenants who were looking for a great deal after being priced out of Wicker Park. Now, it’s one of the hottest and fastest-growing areas in the city. Rents have gone up—the average price of a studio apartment is now between $800 and $900, with larger apartments costing more—a lot of new businesses are thriving, and the overall feel of the neighborhood is much more fun and exciting than it used to be. As a landlord or property owner, finding properties in neighborhoods that are growing but not yet fully built-up—such as Humboldt Park or Avondale—can mean a high return on your investment. In a similar vein, purchasing apartments, condos, and homes in popular Chicago neighborhoods like Hyde Park, Lakeview, and West Loop can mean you’ll always have people interested in your property.
Taking advantage of growing areas means keeping a close eye on where developers are heading and where tenants are moving from. This will give you a good idea of where to buy or rent next—property owners benefit a great deal from getting into a certain real estate market early. As an area heats up, you can adjust rent accordingly and watch your profit margin rise. You’ll also want to look at properties that are closer to the L stops and bus lines—as we previously mentioned, ease of getting around is a major reason people pick to live in one place over another. That means that cost of properties will be different even from block to block. Choosing location wisely can have a huge impact on your property’s success.
Start Taking Advantage of Opportunity
When you’re ready to start capitalizing on new rental properties or want to learn more about why some neighborhoods cost more to rent and own in than others, property management companies can offer a lot of insight. At Lofty, we’re ready to help you get the most out of your investment so that you can live the life you deserve. Contact us anytime to find out more about investment properties in Chicago and how you can make them work harder for you.
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