One of the most exciting—and most challenging—things about investing in Chicago real estate is that the market is always changing. Neighborhoods that were untouchable ten years ago now feature some of the hottest real estate in the city. Yesterday’s up-and-coming parish is now pricing out the young and working-class residents, who are moving into (and gentrifying) the “worst” neighborhoods in Chicago. As a real estate investor, I’m constantly researching local markets and talking to homeowners so I can spot trends and take advantage of opportunities that my competitors might miss.
When I look for the best places to buy investment property in Chicago, I consider factors such as:
- The inventory of distressed houses that you can buy for cheap, renovate, and sell for a profit: If your goal is to flip houses and maximize your ROI, then you should likely focus on neighborhoods with cheap, distressed properties. You’ll have a greater chance of success than if you spend all your time looking for a dream deal in an upscale parish.
- The population growth (or decline) of the neighborhood and the demographics of the residents moving in: One way to spot an up-and-coming neighborhood is to track who’s moving in and out of the area. If a lot of young professionals are starting to rent and buy properties somewhere, or an influx of new businesses are setting up shop, then it’s probably a good neighborhood to invest in.
- The selling price of new and renovated homes both in the neighborhood and in the surrounding areas: Obviously, you want to invest in a neighborhood that’s up-and-coming, not one that’s in decline. Your goal is to find an area that’s seeing some price increases without a lot of volatility. I also like to compare home prices in the surrounding neighborhoods as well, as they could point to upcoming changes in that market. For instance, when prices in Logan Square got too high for many local residents, they migrated to nearby Humboldt Park, which then became the next “hot” neighborhood.
Now that you know how I choose the best places to buy investment property in Chicago, it’s time to share my picks.
The Best Places to Buy Investment Property in Chicago
Long-time Chicago investors may be surprised at the neighborhoods I’ve chosen because I don’t include some obvious choices like Logan Square or Humboldt Park. Honestly, there’s just so much competition in those neighborhoods, and not enough inventory of cheap, distressed properties to go around. Logan Square has become one of the most expensive neighborhoods in Chicago, so your potential ROI as a house flipper is going to be fairly low. Humboldt Park is more affordable, but it’s also one of the hottest investment markets in Chicago right now, so you’ll face a lot of competition over any good leads. In my opinion, these three neighborhoods are the best places to buy investment property in Chicago this year.
Roger’s Park
I’ll start us off with Rogers Park, which is poised to be one of the best up-and-coming real estate markets for new investors. Though average home prices have recently crept into the $250k range, there are still plenty of distressed properties available for around $100K. Rogers Park is full of older, pre-WWII single-family homes and small apartment buildings, which tend to be great candidates for flips. That’s because these properties usually feature high-quality construction and materials, and just need some modern upgrades and TLC to show their true potential.
Another reason to consider Rogers Park is the schools, which are consistently ranked as some of the best in Chicago. That means a lot of young families are moving to the area, which tends to drive prices up. Rogers Park also shows a lot of promise as a rental market, thanks to the close proximity of both Loyola University and Lake Michigan. You could capitalize on the constant influx of new students looking for rental housing every school year, and then convert your property to a vacation home during the summer months to keep up a steady income. Overall, I think Rogers Park should be on every budget-conscious real estate investor’s list of the best neighborhoods in Chicago this year.
Englewood
I know this is a controversial choice; many real estate investors would consider Englewood one of the worst neighborhoods in Chicago. However, I think there’s a lot of opportunity for smart investors to make a ton of money in this market. To start, the median home price in Englewood is well under $100K, which means you’ll have no trouble finding leads on distressed properties. However, if you play your cards right, you could potentially sell for much more; in some areas in Englewood, homes are currently going for upwards of $600K.
Are you as surprised as I was to hear that number? As a long-time Chicago resident who knew of Englewood by reputation only, I thought that had to be a mistake. But then I researched the changes happening in the neighborhood, and those prices started to make more sense. For example, the “L” stations are being renovated, a new STEM school opened a couple of years ago, and loads of healthy grocery stores and restaurants have popped up to serve the changing population. These are all clear signs that Englewood is on the rise, so you should keep an eye out for investment opportunities here in the months to come.
Avondale
In my experience, Avondale is one of the most overlooked neighborhoods in Chicago. While many real estate investors have been focusing on trendier neighborhoods like Logan Square and Humboldt Park, Avondale has been quietly gentrifying for years. In fact, the average home price is currently in the $450-500K range, so if you can snap up a distressed property and renovate it at a reasonable cost, you could potentially make a lot of money. However, in my opinion, the real potential in Avondale is the rental market.
The majority of Avondale residents are renters, and current rental prices range anywhere from $1,300 to $2,000 per month, which is higher than the city average. The neighborhood has a mixed urban/suburban feel, which tends to attract young families and other folks who are losing interest in the hustle and bustle of downtown. Plus, there’s easy access to both public transportation and the I-90, so more young professionals are moving in as well. Avondale appears to be a mid-range neighborhood on the verge of becoming high-end, which means savvy investors could make a lot of money here.
An Easier Way to Find Leads in Chicago
The Chicago real estate market is constantly changing, which means this year’s hot neighborhood could be old news by next year. As a new investor, you may be wondering how you can possibly keep up with local real estate trends across such a large city with such diverse neighborhoods. Part of it is just experience—the longer you invest, and the more time you spend in Chicago’s neighborhoods, the better you’ll be at spotting new opportunities. However, there is a shortcut to gaining this kind of in-depth local knowledge: becoming a HomeVestors® franchise.
As an independently owned and operated real estate investment franchisee, you’ll be connected to a HomeVestors® Development Agent, who will be your one-on-one mentor and guide to the local Chicago market. Your Development Agent will help you create strategies for finding the best places to buy investment property in Chicago, walk you through your first few deals, and can help to give you the confidence to grow your business. Plus, you can take advantage of the nationally-recognized “We Buy Ugly Houses®” marketing campaign to get leads on distressed properties in Chicago.
Ready to find the best places to buy investment property in Chicago with HomeVestors®? Reach out today to learn more about becoming a franchisee.
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