With a thriving real estate market and stable housing costs, Chicago presents itself as an ideal opportunity for investment. From single-family homes to multifamily and more, real estate in Chicago provides investors an extensive array of properties to consider when exploring this particular investment option.
While investment real estate can produce incredible returns, there are certain things you need to consider while selecting the right property. The basics include doing a comparative market analysis, creating a pro forma, and calculating your return on investment. However, there are additional, more subjective, things to consider as well.
Next time you want to invest in real estate in Chicago, consider the following things:
- Know Your Renters. Depending on your area of interest, the tenant market will vary. An area with a college/university is bound to have a dense student population. Here, investing in smaller single family homes will typically be less lucrative than investing in larger homes or multifamily apartment buildings.
- The Value Add. Before you purchase your next rental property, take a look at what the improvement possibilities are for the property. Can you convert a 1 bedroom into a 2 bedroom? Can you dormer a roof and add a 4th unit? By looking for value add opportunity, you can take an average investment and make it a home run.
- Local Market Momentum. This is closely related to the Golden Rule of real estate (Location, location, location). Is the local neighborhood growing or declining? Are business and tenants moving into or out of the neighborhood? Is the crime rate rising or declining? Buying in the right area can be make or break for any real estate investment.
Although these questions are some of the toughest to answer, they’re also the most important. Whether it’s your first deal or your hundredth deal, using a qualified real estate professional to help find and analyze deals can set you on the path to success in real estate investing.