Evaluating a rental investment property, especially Chicago multifamily properties, requires considering several key factors.
- Cash flow: Determine the amount of money left after paying all expenses like mortgage, taxes, insurance and repairs. Positive cash flow ensures rental income covers expenses and generates profit.
- Capitalization rate (Cap Rate): Compare the net income of the property to the purchase price or current market value to evaluate potential return on investment. A higher cap rate usually indicates a better investment opportunity. In Chicago, properties with higher purchase price per unit tend to have a lower cap rate.
- Location: The location of the property affects its potential for appreciation and rental income. Properties in desirable areas appreciate more and are easier to rent. Chicago’s 77 neighborhoods all have unique characteristics.
- Property condition: Assess the potential for repairs or renovations needed before making a purchase. Understand the costs and timeline for repairs.
- Tenant demand: Look into the demand for rental properties in the area and the types of tenants likely to be interested. This predicts consistent rental income and minimizes vacancies.
- Future development plans: Check for any proposed developments that may impact the property’s future value.
- Consult with professionals: Contact me for a personalized consultation to find Chicago multifamily properties and luxury homes that are right for you.
Bryan Hayes , Chicago Real Estate Investment Broker
Lincoln Park Office
1910 N Clybourn Ave
Chicago, IL 60614