“Come back to Chicago, city of…” Airbnb investments.
What makes Chicago so great for an Airbnb investment property? There’s a lot to consider.
Chicago, or The Windy City, is ranked as the third largest city in the US after New York City and Los Angeles. The demographic breakdown of the city is mostly young. Millennials make up more than 20% of Chicago’s population. This is due to the fact that, while doing so slowly, the Chicago job market is growing, and so is the economy especially in sectors like healthcare and financing. The city has also seen several housing starts recently, which are basically homes under construction. These all translate into higher demand for rental properties for Chicago real estate, and for a profitable opportunity for a real estate investor. So while growth, in general, may not be as fast as other cities in the US, the city is doing very well overall.
Reasons to jump in
So we talked about why you should consider investing in Chicago in general, but why should you go with an Airbnb rental strategy?
It’s a (very) popular visitor destination
People love Chicago! Not only is it the third most populous city in the US, Chicago is also the third most visited in the nation. Tourists flood into the city by the millions. In 2017, Chicago reached a record number of annual visitors that amounted to 55.2 million, a 2.5% increase from 2016. Why is this information important? Being this popular of a visitor spot, there’s great potential for investing in an Airbnb property in the city.
And these numbers come as no surprise. Chicago really is a city that’s got it all. From great dining experiences to the underground scene to its architecture, and notable business district, there’s a little bit of everything to do for everyone.
Airbnb Chicago has few legal issues
Although Airbnb is usually known to be surrounded by legal issues in cities it operates, this is not quite the case for Chicago. We’ve seen multiple examples of cities going against Airbnb in legal battles, the most known ones being New York City and San Francisco. Chicago, on the other hand, has already adopted a rental ordinance in 2016 which has since been slowly put into effect. The ordinance imposes a 4.5% hotel tax, in addition to other regulations. Airbnb Chicago investors are now more than ever required to be registered and licensed by the city before they can list their properties on Airbnb. And if listings are not authorized, they run the risk of being fined up to $5,000 per day. This regulation is part of the city’s attempt to limit the number of listings and properties rented out on these home sharing websites.
Additionally, it’s worth mentioning that Airbnb is currently the only licensed home sharing website in Chicago. So if you’re considering the short-term rental industry, Airbnb is your go-to choice! Airbnb Chicago is a successful example of how Airbnb can reconcile with city councils, as well as the local population, and avoid controversy. Of course, there were investors and local hosts who had criticisms of the ordinance. But in general, Airbnb has succeeded in developing and regulating the ordinance.
Simply said: It’s affordable and profitable
For a city this big and this popular in the nationwide real estate market, you can find affordable real estate deals for Chicago investment properties. The median home price in Chicago is $446,995. At the same time, Chicago remains one of the top performing Airbnb markets nationwide. In 2015, Chicago Airbnb investors made the third largest profit of all investors nationwide. Also, Chicago’s popularity means that the demand for Airbnb as a service, and for Airbnb investment properties, is high. Investors should thus capitalize on this opportunity by investing in Airbnb Chicago.
Mashvisor data depicts the profit opportunity in investing in Airbnb Chicago. Below, you’ll find a detailed breakdown of some of the top Airbnb Chicago neighborhoods. For more data on these Airbnb Chicago neighborhoods among others in the Chicago real estate market, and to learn about your options for signing up for our services, click here.
Top Airbnb Neighborhoods
We’ve laid out the best performing neighborhoods in Chicago for Airbnb investing.
West Loop Gate
This neighborhood is among the most affordable on this list. It’s a section of the larger West Loop neighborhood, a hip residential neighborhood right outside of the city. The neighborhood has experienced substantial growth in past years which still reflects today, making it a great investment opportunity.
Median home price: $367,868
Airbnb occupancy rate: 54.9%
Airbnb rental income: $3,312
Airbnb CoC return: 2.28%
Airbnb cap rate: 2.28%
This neighborhood is known as Chicago’s “artificial island” which overlooks the Chicago River. Goose Island is considered within the mid-range of median home prices and stands at $511,867. So while a bit more expensive than West Loop Gate, it’s still an affordable option.
Median home price: $511,867
Airbnb occupancy rate: 52.57%
Airbnb rental income: $2,941
Airbnb CoC return: 1.16%
Airbnb cap rate: 1.16%
Chicago Loop, or simply The Loop, is Chicago’s central business district, downtown, and a community area for the city. The neighborhood is also known for its architecture, cultural hub, and urban spaces. It’s thus no surprise that it is a popular choice for tourists and visitors. There are few times when the neighborhood is not bustling. So naturally, The Loop lies on the more expensive range of Chicago real estate investing neighborhoods.
Median home price: $727,527
Airbnb occupancy rate: 61.63%
Airbnb rental income: $3,955
Airbnb CoC return: 1.57%
Airbnb cap rate: 1.57%
Fulton River District
From industrial to residential, Fulton River District is considered one of Chicago’s fastest growing neighborhoods. For tourists and locals alike, it’s the perfect mix of residential, artsy, and leftover industrial. Located at the end of Downtown, the neighborhood flaunts its up and coming dining scene. It’s definitely a neighborhood tourists look into when considering Airbnb Chicago. What’s also great about Fulton River District is the fact that it’s affordable considering its popularity and profitability.
Median home price: $469,579
Airbnb occupancy rate: 54.87%
Airbnb rental income: $3,029
Airbnb CoC return: 1%
Airbnb cap rate: 1%
A final word on Airbnb Chicago
As you can tell by now, Airbnb and Chicago go well hand in hand. Investing in an Airbnb property in Chicago has a lot of potential. We’ve provided four neighborhoods where investing would be successful, but there are numerous other options to consider. One thing you should keep in mind when investing in Airbnb Chicago, however, is the legal regulations. The most important part of investing in real estate is making sure you are doing so legally, and within the regulations that the city imposes. Finally, make sure to always conduct real estate market analysis before any investment to ensure that you’re making the most out of any opportunity.