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Agreed with above posters - wicker/Logan sales are due to cap rate decreasing.. but there is so much demand there. I would have bought in the area these past few years, but it never cash flowed as well as other areas and I never bet on appreciation.
I am debating where my next purchase will be.. but I’m thinking it will be off the green line on the West Side, although I think EGP is a bit overvalued. I might go to WGP where the crime is kind of ridiculous, but the cash flow is worth it. Obviously not an owner occupied purchase. The heroin dealing is the cause of a lot of problems, but I love the transit in the area and the housing stock is great
Mango I agree with you that EGP is lacking in commercial zoning. I wish the commercial strip on Madison in WGP was actually on the east side. However, wasn't West Loop the same back in 2010? Sure you had some Greek Town restaurants on Halsted but Randolph Street was nothing but old butcher shops and brick industrial buildings....and now look at it! I remember when my friend bought in the Emerald Building at 123 S Green Street he said there was literally NOTHING around. Was a bit of an exaggeration but still in 6-8 years that area has exploded like crazy. Why do you not expect the train lines to carry that west especially with so many open lots that could be rezoned for commercial use as well as the multiple commercial buildings north of Lake that could be repurposed?
I went to Whitney Young HS in the early 90’s. I definitely remember seeing emptiness and having some odd experiences in the area. The West Loop area changed so much and in a relatively short amount of time. I regret choosing to buy in Naperville at the time over a 2/2 loft in the West Loop. Oh, well...
I agree that WGP is definitely set up better for commercial on Madison Ave, nice wide streets. As for EGP, I included Lake St in my previous post. Lake St, Madison, and Western. I’m trying to figure where additional commercial property could go in EGP without tearing down a lot of existing housing for the sake of grabbing the vacant lots. Maybe around the Harrison police station and Kedzie. Maybe some parts on Sacramento. There’s a lot of potential around Homan Square, but crossing Taylor and south to Roosevelt is North Lawndale, not EGP. There was a good plot of land along 5th Ave, but it’s being built on with affordable housing.
I don’t doubt re-zoning can happen, but it would take people living in the area or at least being more concerned than just collecting rents to make it happen. United Center area got Pete’s and all types of little businesses because of the homeowners in the area between Ashland and Western.
Agreed with above posters - wicker/Logan sales are due to cap rate decreasing.. but there is so much demand there. I would have bought in the area these past few years, but it never cash flowed as well as other areas and I never bet on appreciation.
I am debating where my next purchase will be.. but I’m thinking it will be off the green line on the West Side, although I think EGP is a bit overvalued. I might go to WGP where the crime is kind of ridiculous, but the cash flow is worth it. Obviously not an owner occupied purchase. The heroin dealing is the cause of a lot of problems, but I love the transit in the area and the housing stock is great
Investing in WGP is insane. It is literally an open air drug market war zone decades away from gentrification and surrounded by other war zones like North Lawndale and Austin. Trust me I would love to buy the old Guyon hotel and return it to its former glory but it's likely not happening in my lifetime. It will take forever for EGP to fill in before it spills over to WGP.
I agree with you that millennial investors are too overeager. I walked into one building that was stripped clean of copper and all torn up and was "For Sale by Owner" and a few people wanted to finance the purchase. (1) there is no way a bank will lend on the building and (2) if you need to finance the purchase then where are you gonna get the cash to fix it up? Some just don't know what they're doing and should be starting out in easier-to-learn areas on more rent ready buildings.
However, I think you've answered your own questions. The last 3 years you can see what's happened in Logan Square. Any multi-unit where people want to live in one and rent the other have multiple offers in a matter of days and most are all cash so I know people have searched for years and haven't had much luck. That's why they're pushing up to Avondale (which I think is the last stop on the blue line that will develop)....and eventually why I think EGP and Pilsen will take off. I agree home buyers are not living in EGP but they literally have nowhere left to go.
And as to why wealthier people are cashing out of Wicker / Logan I think you've answered that too...the cap rates aren't that great and the rental market will soften in 2019 so why not cash out while rents have peaked and interest rates are low so your cap rates are at their best?
They can do a 203k loan if it's 4 units or less. The problem with that is 203k loans over 30k require you to hire an approved general contractor to manage the project. That's probably a good idea for these kids because they have no idea what the hell they're doing but it will add a layer of cost, especially since everything will need to be permitted. Their investor competition with cash will not have to go through these things and will end up with a cheaper product with a much better cap rate.
The interest rate spread is also a point to a point and a half higher on the rehab component. I don't think a lot of these Millennials really understand how fast costs can add up on an old neglected building.
So what might happen in your scenario is that the young couple will buy that pretty distressed greystone for the seemingly low price of 150k, but they'll ultimately end up with another 150k 203k mortgage that they'll need to service at 5.5% to 6%,. And they'll still have a property in the ghetto that's going to attract tenants who very well might destroy what they built, as they try to manage it remotely waiting for the neighborhood to turn into the next Logan Square.
Agreed with above posters - wicker/Logan sales are due to cap rate decreasing.. but there is so much demand there. I would have bought in the area these past few years, but it never cash flowed as well as other areas and I never bet on appreciation.
I am debating where my next purchase will be.. but I’m thinking it will be off the green line on the West Side, although I think EGP is a bit overvalued. I might go to WGP where the crime is kind of ridiculous, but the cash flow is worth it. Obviously not an owner occupied purchase. The heroin dealing is the cause of a lot of problems, but I love the transit in the area and the housing stock is great
To WGP? That is jumping out of the frying pan and Into the bleeping fire, as they say. If you think East Garfield Park is overvalued (it is), why don't you buy in Cicero? You can get a beautiful and renovated two or three flat for the price of a two or three flat that needs work in East Garfield Park, and you'll get a solid if not glamorous tenant base.
Problem is everybody wants that big hit so they won't look at a place like Cicero. But West Garfield Park is not going to gentrify in your lifetime.
To WGP? That is jumping out of the frying pan and Into the bleeping fire, as they say. If you think East Garfield Park is overvalued (it is), why don't you buy in Cicero? You can get a beautiful and renovated two or three flat for the price of a two or three flat that needs work in East Garfield Park, and you'll get a solid if not glamorous tenant base.
Problem is everybody wants that big hit so they won't look at a place like Cicero. But West Garfield Park is not going to gentrify in your lifetime.
I guess WGP has a few things working against it in terms of the industrial areas, vacant lots, bad crime, bad tenant base - but it definitely feels very sandwiched, between train-connected ares like northern berywn, forest park, oak park, river forest to the west loop - than places on the northside or southside. The housing stock isn't as decimated as Washington Park/western grand boulevard.. West of Humboldt is really getting nicer quickly (without access to a train) and that is going to fall southward eventually.
North Lawndale is forever going to be in a bad place, but I could see WGP getting to be in a pre-gentrification state in 15 years - closer to Brighton Park in income/crime, but with more potential.
I'm just spouting off thoughts.. but it is hard to predict the flow of RE.
Cicero on the other hand, has fairly high taxes relative to Chicago with bad schools k-12. I go there all the time and would be fine living there - especially in a bungalow, but its very low on my list.
I laughed out loud at the thought of anyone on CD purchasing property in WGP. I'm curious: what makes North Lawndale more of a "bad place" than WGP? I think the housing stock in North Lawndale is more appealing to an investor. The area used to be Jewish. If it's a public trans issue...they can always make an area more accessible. That won't be a problem.
I laughed out loud at the thought of anyone on CD purchasing property in WGP. I'm curious: what makes North Lawndale more of a "bad place" than WGP? I think the housing stock in North Lawndale is more appealing to an investor. The area used to be Jewish. If it's a public trans issue...they can always make an area more accessible. That won't be a problem.
It was Jewish about 100 years ago. It is decidedly not Jewish today. But yes, I would say that North Lawndale would be a safer bet then West Garfield Park, and that's not saying much at all. I wouldn't invest in either one.
There is some speculation in the southeast portion of North Lawndale around Douglas Park but that's about it. I don't see that changing in list of some major economic expansion in Chicago.
That's really the only thing that's going to be a game changer for any of these neighborhoods. I'd love to see this, I really would, but I'm holding my own money to see how the next few years go. Too much political and fiscal uncertainty now.
Some brave souls here, if you want to buy in WGP. Hard core.
I have friends whose family used to gather every weekend at their grandfather’s building. It was the building where the grandparents had basically bought and raised the family. It was family tradition to meet up and hang out. It didn’t have to be a special occasion or anything. They stopped a few years ago because it had gotten that bad - people who were known in the neighborhood scared to be in the area. Then they lost their brother to assault and battery, not even drug related.
I got plenty of stories... WGP is not what you want. You’re not going to just sit back and collect a check there. Other investments exist... there’s a whole wide world out here to invest in.
Ideally, I would love to see the entire 290 corridor from Chicago to Oak Park come together. “The Presidents” have some lovely wide streets with nice buildings all along. Living west (anywhere within the 294 circle actually) is just great location wise. You can go south, east, north, northwest, and of course further west with relative ease. Lots of challenges to overcome unfortunately.
Some brave souls here, if you want to buy in WGP. Hard core.
I have friends whose family used to gather every weekend at their grandfather’s building. It was the building where the grandparents had basically bought and raised the family. It was family tradition to meet up and hang out. It didn’t have to be a special occasion or anything. They stopped a few years ago because it had gotten that bad - people who were known in the neighborhood scared to be in the area. Then they lost their brother to assault and battery, not even drug related.
I got plenty of stories... WGP is not what you want. You’re not going to just sit back and collect a check there. Other investments exist... there’s a whole wide world out here to invest in.
Ideally, I would love to see the entire 290 corridor from Chicago to Oak Park come together. “The Presidents” have some lovely wide streets with nice buildings all along. Living west (anywhere within the 294 circle actually) is just great location wise. You can go south, east, north, northwest, and of course further west with relative ease. Lots of challenges to overcome unfortunately.
Chicago will essentially have to experience an Austin, Texas style economic explosion for this to occur. There are few here who would be happier to see this than myself. But with our political leadership, are you willing to bet your hard earned money on that happening and buying a building in EGP, WGP, or Austin, and living there as you should if you truly want it to change? I love Chicago but I'm also a realist.
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I'm curious: what makes North Lawndale more of a "bad place" than WGP? I think the housing stock in North Lawndale is more appealing to an investor. The area used to be Jewish. If it's a public trans issue...they can always make an area more accessible. That won't be a problem.
