How to Find the Best Income Properties in the Chicago Real Estate Market

Many investors love the Chicago real estate market. They swear by the high return on investment it provides them. Why do they think it’s the best place to invest in real estate? Because they know where and how to find the best Chicago income properties for sale. They have quick ways of identifying the best Chicago neighborhoods as well as the top-performing Chicago investment properties for sale. Today, I’m going to share with you these ways and then you can decide for yourself if the Chicago housing market is the place to be for investments in 2020 and beyond.

How to Find the Best Neighborhoods in Chicago

Let’s first take a quick look at Mashvisor’s housing market data for the Windy City:

• Median Property Price: $440,711
• Traditional Rental Income: $2,122
• Traditional Cap Rate: 1.1%

You might notice a few things right away:

• High median property price: Although Chicago home prices are considered relatively affordable compared to other major cities in the US housing market, some may find it’s out of their budget.
• High rental income: But if you do fork over all that cash (or get a mortgage) and buy a Chicago rental property, you will generate a high rental income every month.
• Low cap rate: At the same time, the average cap rate for the real estate market is quite low.

If any of those were your initial thoughts upon seeing the data for the Chicago real estate market, you should know that it’s a different story when we start to look at data for the best Chicago neighborhoods. So, how do you find these locations and where can you get this neighborhood data?

One way is to use a real estate heatmap. This tool will help you find affordable neighborhoods in Chicago that also have a good cap rate. Using Mashvisor’s Real Estate Heatmap Analysis Tool, all you have to do is type in Chicago, IL into our search engine. You’ll be taken to a map of Chicago neighborhoods that looks like this:

Next, you’ll want to click on the Explore Data button. This will reveal a few different search filters that you can use to start your neighborhood analysis of the Chicago real estate market. They include:

• Listing Price
• Airbnb Cash on Cash Return
• Traditional Cash on Cash Return
• Airbnb Rental Income
• Traditional Rental Income
• Airbnb Occupancy Rate

Because we want to figure out where the best income properties are located in the Chicago real estate market, let’s focus on two filters for now:

• Listing Price
• Traditional Cash on Cash Return

If you set the Listing Price filter, this is what the Real Estate Heatmap will look like:

You can see from the price range at the bottom of the map that there are plenty of neighborhoods in the Chicago real estate market where you’ll find affordable investment properties for sale. Those highlighted in red and orange have median listing prices far below the city median listed above. 

But you’re not done identifying the best Chicago neighborhoods just yet. Affordability is only part of the recipe. You also need a high return on investment. So let’s set the Traditional Cash on Cash Return filter. Remember, cash on cash return is equal to cap rate until you factor in your financing method. Any neighborhoods highlighted in green using this filter will have high cap rate investment properties for sale:

Comparing the two heatmaps of the Chicago real estate market, you can see that there are neighborhoods that are red when the listing filter is on and green when the cash on cash return filter is on. These are the best neighborhoods in Chicago for buying a rental property for sale. It’s that easy to find them.

Related: Heatmap Analysis: Real Estate Investing

You’ll want to look at any promising neighborhood in depth by visiting its Neighborhood Analytics Page. Here, you’ll get all kinds of neighborhood data including:

• Number of Properties
• Optimal Rental Strategy
• Walk Score
• A Historical Rent Analysis
• Real Estate Comps

And more. Check out this Neighborhood Analytics Page.

To help you complete your neighborhood analysis of the Chicago real estate market quicker, we went ahead and pulled the top neighborhoods for you based on property type:

Best Chicago Neighborhood for All Property Types

West Pullman

• Median Property Price: $111,348
• Price per Square Foot: $89
• Price to Rent Ratio: 8
• Traditional Rental Income: $1,186
• Traditional Cap Rate: 4.6%

Best Chicago Neighborhood for Single Family Homes for Sale

Fernwood

• Median Property Price: $119,392
• Price per Square Foot: $106
• Price to Rent Ratio: 8
• Traditional Rental Income: $1,302
• Traditional Cap Rate: 5.3%

Looking at city averages, Mashvisor’s market data shows that single family homes make for the best Chicago real estate investments. The cap rate on the city level is 2.5%. Start searching for a single family home in Chicago now.

Best Chicago Neighborhood for Condos for Sale

Wrightwood Neighbors

• Median Property Price: $595,561
• Price per Square Foot: $335
• Price to Rent Ratio: 16
• Traditional Rental Income: $3,075
• Traditional Cap Rate: 1.2%

Best Chicago Neighborhood for Townhouses for Sale

Pill Hill

• Median Property Price: $64,667
• Price per Square Foot: $61
• Price to Rent Ratio: 4
• Traditional Rental Income: $1,230
• Traditional Cap Rate: 4.4%

Best Chicago Neighborhood for Multi Family Homes for Sale

The Bush

• Median Property Price: $ 120,000
• Price to Rent Ratio: 7
• Traditional Rental Income: $ 1,384
• Traditional Cap Rate: 6.9%

Many Chicago real estate investors prefer multi family rentals to single family rentals. Even though property data shows that single family homes for rent are more profitable on average, multi family homes for sale in Chicago do generate a good return on investment and positive cash flow in the city. 

Start your search for a Chicago multi family home for sale now.

How to Find the Best Chicago Income Property for Sale

The next thing you’ll need to do is identify the top investment property for sale in Chicago. As mentioned, the cap rate for a real estate market (including the average cap rates for neighborhoods) is typically on the low side. But you can find high cap rate investment properties for sale in the Chicago real estate market. Again, though, it’s done most efficiently if you’re using online real estate investment tools. 

To sort through all of the Chicago houses for sale and get to the best one quickly, use Mashvisor’s Rental Property Finder. This tool will shave months off of your investment property search. 

Visit the Rental Property Finder and add Chicago, IL as the location. You have a few other filters to choose from:

• Distance from Location
• Budget
• Rental Strategy
• Type of Property
• Number of Bedrooms and Bathrooms

If you’re still on the fence about investing in Chicago real estate, you can actually use this tool to search in multiple cities at once and compare investment returns. Let’s say you wanted to compare how single family homes for sale perform in the Chicago real estate market vs the NYC real estate market. Set the following filters:

• Add both cities to the location filter. 
• Select the traditional rental strategy.
• Set the “Type of Property” filter to single family residential.

This is what the results would look like today:

The Rental Property Finder returns the best income properties based on cash on cash return. So you can see from the image above that Chicago single family homes generally outperform those in the NYC housing market.

That’s just one way to use this powerful tool. Click here now to sign up for Mashvisor and set the filters to find high return Chicago income properties for sale that match your exact criteria.

The Rental Property Finder also gives you access to Mashvisor’s investment property calculator. This calculator also doubles as an Airbnb calculator for short-term rental investors. When buying property in Chicago, you want to be sure to conduct a full investment property analysis on any property of interest. Simply click on any listing and you’ll be taken to the Property Analysis Page where you’ll find stats on the property:

• General Property Information
• Rental Income
• Rental Property Expenses
• Cash Flow
• Cash on Cash Return
• Cap Rate
• Occupancy Rate
• Rental Strategy Comparison (Traditional vs Airbnb rental strategy)
• Tax History
• Investment Payback Period 
• Rental Comps
• Real Estate Sales Comps

Related: How to Find Rental Properties Using Online Tools and Resources

What About Off Market Properties in Chicago?

Some real estate investors are only interested in off market properties. Mashvisor knows this so we have another tool that will help you find off market properties in the Chicago real estate market- The Mashvisor Property Marketplace.

Just like the other tools, this one uses a combination of real estate data analytics and simple filters to help you find the best off market properties in Chicago. Take a look:

Some of the filters you can choose from include:

• Location
• Mile From
• Budget
• Rental Strategy
• Type of Property
• Bedrooms and Bathrooms
• Cash on Cash Return
• Cap Rate
• Listing Type (Non MLS, Foreclosure, Needs Repair, Tenant Occupied)

Using this tool, you can easily find Chicago foreclosed homes, bank owned homes, short sales, auction properties, and Non MLS homes.

Related: The Best Tool to Find Off Market Properties

Find a High Return Property in the Chicago Rental Market Today

If you’re looking to enter the Chicago real estate market, be sure you know how and where to find the best income properties. The best way to figure this out is with Mashvisor. Try it out for yourself with a 7-day free trial now.