What are Your Thoughts on West Humboldt Park, West Logan Sqaure and Hermosa? (Chicago: low income)
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Out of state investor here. I have been following Chicago real estate and made a few offers but found the market very competitive and the neighborhoods that I am targeting to be very expensive.
At any rate, I see some properties in the west side of Humboldt Park, west Logan Square and Hermosa that are within my price range and generally higher returns. Obviously, I am not familiar with this area but am wondering if it's worth investing. What are your thoughts on the area west of Kedzie, east of Cicero, between W Augusta and Fullerton; in terms of safety, challenges, potential to get better, etc.
It seems to me that the further west, the lower the price. Is it really that bad out west? I'm especially curious about the area west of the train tracks that cut across North Ave., as I see more choices out there within my range. I also notice that North Ave seems to be a dividing line, Is there a noticeable difference north of North vs south of North?
Lastly, where does Logan Square starts? I've read that it's north of Bloomingdale, but other sources say it's north of North Ave. And is there any plan to extend the 606 westward?
Fairly easy to find these things even from afar...
Quote:
Originally Posted by beb0p
Out of state investor here. I have been following Chicago real estate and made a few offers but found the market very competitive and the neighborhoods that I am targeting to be very expensive. Many people believe that there have been unsustainable price movements that will come down as the reality of weakness in the overall job market is realized. While gentrification has helped make some formerly awful west side areas into options for young recent college grads, expansion of high rises closer to the Loop will likely draw more such folks closer to the core. Issues with schools and other amenities for families / high wage workers including Brown Line L make areas in Lakeview / Lincoln Park and even pockets like Andersonville, Roscoe Village, Lincoln Square and other north side spots far more desirable. Understanding how this factors drive prices is something one can learn from online research but it is far more apparent when walking / driving around Chicago -- one area still has "currency exchanges" to cash check and "liquor stores" to serve the low income while other areas have brokerage offices and Whole Foods Markets. The physical separation may be literally the width of a few streets.
At any rate, I see some properties in the west side of Humboldt Park, west Logan Square and Hermosa that are within my price range and generally higher returns. Obviously, I am not familiar with this area but am wondering if it's worth investing. What are your thoughts on the area west of Kedzie, east of Cicero, between W Augusta and Fullerton; in terms of safety, challenges, potential to get better, etc. The negatives associated with parts of Chicago that are poorly served by CTA Rapid Transit L lines are well known and include not just a difficulty in commuting to Loop based employment but a general lack of even basic shopping options, poor choices for dining / entertainment, heightened issues with lawlessness and general undesirability. The costs associated with expanding L service are extremely prohibitive and the issues with buses interfering with other surface traffic means these parts of Chicago will never be considered "convenient" in the way that neighborhoods closer to the Lakefront have attracted professional class workers. Toss in issues with Chicago's weather making such spots unsuitable for bicycling for large parts of the year and even "hipster" driven reuse is unlikely. While some investors have tried to gentrify these areas, the smart money looks for sites that are more likely to see good returns more quickly.
It seems to me that the further west, the lower the price. Is it really that bad out west? I'm especially curious about the area west of the train tracks that cut across North Ave., as I see more choices out there within my range. I also notice that North Ave seems to be a dividing line, Is there a noticeable difference north of North vs south of North? Yes, due to the above issues along with the basic geography of how Chicago is hemmed in by Lake Michigan to the east and sliced up by the diagonal Kennedy Expressway areas further west are significantly less desirable. There have periods in the recent past where the City of Chicago has literally installed chain link fence at some railroad underpasses (viaducts) as a kind of "Berlin Wall" to separate undesirable areas from residents with connections to insiders. These patterns can be traced back to unrest in the 60s that fueled the movement of employers and workers to areas nearer to / beyond O'Hare. Subsequent shifts that have seen many firms reduce US employment and logistics oriented firms seek vacant land for highly automated freight handling have made such areas veritable wastelands of non-employment. Folks with no hope of ever having real jobs sadly turn to illegal activity. Coupled with a dysfunctional school system that cements the differences between the well-off haves in nicer areas and the desperate have-nots in forgotten areas this serves as a textbook example of "hopelessness". It would be extremely unwise for any investor, especially one from outside the area, to attempt to count on positive changes in these areas.
Lastly, where does Logan Square starts? I've read that it's north of Bloomingdale, but other sources say it's north of North Ave. And is there any plan to extend the 606 westward? There is always "controversy" over the borders of nice / improving areas. When it comes to Logan Square these issues are even more complicated because of the way Logan Square refers to an official "community area" that Chicago uses for planning, a historical area that residents identified with, often along racial lines, and an actual geographic spot that is easily recognized. https://en.wikipedia.org/wiki/Logan_Square,_Chicago
Even more so because of the unusually carved up way that recent Aldermanic Ward Maps have sliced Logan Square into the various fiefdoms of politicians that might try to appease existing residents the area has higher than usual controversy - The Aldermen of Logan Square | LoganSquarist
Of course the SOUTHERN boundary is really less important as most of the areas to the south, east of Kedzie, fall into Wicker Park which is even more desirable to renters / buyers than Logan Square. The most "desirable" (more like least problematic...) portions of Humbolt Park are really more likely to be mislabeled to attract unsophisticated real estate speculators. The issues further west are generally easily seen / heard by anyone that understand that neither buyers nor renters want to be near active crime scenes... Readers Weigh In On Logan Square Boundaries
The city has no funding nor incentive to extend the Bloomingdale Trail / 606 to the west. Folks around Logan Square and even Lincoln Park have expressed interest in eastward expansion but that would involve funds that the city does not have to bridge or tunnel around the massive Kennedy expressway, something that is not likely to ever happen -- Will The 606 expand east? - redeyechicago.com
Thanks in advance.
While I applaud the interest of those from outside the area to investigate the potential for making money on Chicago real estate the bottomline is that having "boots on the ground" is a real necessity -- often the positives of an un-updated home motivate neighbors to work heirs on the purchase of such fixer-uppers with no involvement of real estate professionals. Similarly the negatives of places that look "promising" online can only be understood by hearing the sirens and gunshots that are a reality in some parts of Chicago.
As massive rental and condo buildings are built closer to the Loop the 'center of mass' for activity is rapidly shifting. That will mean that some buildings further out that have already been fixed up will likely end up attracting lower quality tenants that were previously displaced by gentrification efforts. For folks that understand the negative demographic trends that dominate Chicago and are willing to accept the risks of Section 8 tenants that might be a viable way to at least recoup a bit of their investments but such trends are not a positive for "flippers" who look for more immediate returns. It is well known that even landlords who rarely visit their investment properties in rougher areas are often greeted with unpleasant surprises when they venture out of their nice neighbors to see if the tenants' phone has been disconnected and instead find the whole place burned out, the difficulty of doing such a rental from even further away cannot be overstated. Flippers who dream of "quick money" would do well to understand that often the boarders in Chicago neighborhoods mean the difference between a family having access to a school with superlative educational opportunities and one that is truly a gang-infested nightmare. Unlike regions where huge natural borders define such inequity like the literal deep water bay that separates San Francisco from Oakland or the river / sea that makes Manhattan an island of singular prosperity separate from lesser areas, the history of Chicago's corrupt political class is what makes the differences between insiders making out like bandits while those literally an alley away scramble for whatever meager scraps they can get...
For tenants, it all depends on whether you rent to cokeheads or not.
(What White people refer to as cokeheads, Black people refer to as crackheads.).
If you have crackheads as tenants they will do everything they can to pay the least amount of rent. That often means living the last 3 months for free, or however, long the eviction process takes. It was like that in a rooming house I lived at, when they decide to move out, they spot paying rent, so you can take the long, eviction process.
1 person had it such that, he had 2 suitcases and the room empty, waiting for the day the sheriff comes. Another moved a lot of his stuff to storages, and had a grocery cart-wheel out, ready to move the rest out for the day the sheriff comes.
While I applaud the interest of those from outside the area to investigate the potential for making money on Chicago real estate the bottomline is that having "boots on the ground" is a real necessity -- often the positives of an un-updated home motivate neighbors to work heirs on the purchase of such fixer-uppers with no involvement of real estate professionals. Similarly the negatives of places that look "promising" online can only be understood by hearing the sirens and gunshots that are a reality in some parts of Chicago.
As massive rental and condo buildings are built closer to the Loop the 'center of mass' for activity is rapidly shifting. That will mean that some buildings further out that have already been fixed up will likely end up attracting lower quality tenants that were previously displaced by gentrification efforts. For folks that understand the negative demographic trends that dominate Chicago and are willing to accept the risks of Section 8 tenants that might be a viable way to at least recoup a bit of their investments but such trends are not a positive for "flippers" who look for more immediate returns. It is well known that even landlords who rarely visit their investment properties in rougher areas are often greeted with unpleasant surprises when they venture out of their nice neighbors to see if the tenants' phone has been disconnected and instead find the whole place burned out, the difficulty of doing such a rental from even further away cannot be overstated. Flippers who dream of "quick money" would do well to understand that often the boarders in Chicago neighborhoods mean the difference between a family having access to a school with superlative educational opportunities and one that is truly a gang-infested nightmare. Unlike regions where huge natural borders define such inequity like the literal deep water bay that separates San Francisco from Oakland or the river / sea that makes Manhattan an island of singular prosperity separate from lesser areas, the history of Chicago's corrupt political class is what makes the differences between insiders making out like bandits while those literally an alley away scramble for whatever meager scraps they can get...
Wow, thanks for the very detailed response Chet. Yes, I am exploring and trying to learn about the neighborhood and I will certainly go visit if I decide it is an area worth further exploration.
It sounds to me you are pretty bearish on the neighborhood. Is there any part of Humboldt/LS that you think is worth investing in? Does what you described applies only applies to the western side of HP/LS pass the rail tracks?
As for the new condos closer to the Loop, I'd think they're going to fetch a premium. Could HP/LS become a budget choice for the value conscious renters who don't want to pay Loop prices?
For tenants, it all depends on whether you rent to cokeheads or not.
(What White people refer to as cokeheads, Black people refer to as crackheads.).
If you have crackheads as tenants they will do everything they can to pay the least amount of rent. That often means living the last 3 months for free, or however, long the eviction process takes. It was like that in a rooming house I lived at, when they decide to move out, they spot paying rent, so you can take the long, eviction process.
1 person had it such that, he had 2 suitcases and the room empty, waiting for the day the sheriff comes. Another moved a lot of his stuff to storages, and had a grocery cart-wheel out, ready to move the rest out for the day the sheriff comes.
I certainly would prefer not to rent to cokehead. I had problem tenants in the past and I've learned that having just one such tenant can really suck up a lot of my time and money.
.
The difficulties that one would encounter in building any significant equity or cash flow from rental properties or flipping is massively compounded by not being near by. If you try to get a "property management company" involved that really cuts into profit. Similarly relying exclusively on "full service general contractor" to flip a property makes for an uncomfortable small profit margin. There is no substitute for the "sweat" part of DIY equity building or landlord path. Frankly if you have your heart set on being involved in the broad range of real estate investment but need / want to do remote the better path is almost certainly a narrowly focused REIT. There are some very high yielding choices -- Top 38 REIT - Residential Stocks For Dividend Income - Dividend.com
If are addicted to the "casino level" returns that some "guru" types pitch in their sales material I must caution that this brief summary (aimed at Canadians but applicable to all gamblers...) will help explain who really is paying for the lights, the fountains, and all the other opulence -- 6 Things Casinos Don't Want You to Know About Your Odds*|*Reader's Digest
There is great appeal at a certain stage of your life in having real estate as a "tangible asset" but as you see the pitfalls of how easily such value can be wiped out, but forces outside of your control, you realize that it really is not all that different than the way that forces outside your control in the financial markets can also wipe out value. The big advantage is that once you have a significant asset base there are tools that can limit the downside of financial investments. Efforts by Case-Schiller to popularize a similar hedge for real estate have largely not been successful. Hedge your real estate investments against losses | Property hedging strategies Because of fundemental non-fungibility even in high rises and such (condo on lower level is NOT a fair substitute for one with views among other things...) I do not believe there will ever be a way to truly lower the risk of real estate...
If you have any ability to tackle projects closer to home (wherever that might be) AND benefit from obvious opportunity to translate "sweat into dollars" by cleaning-up, repairing and redecorating homes or apartments on your own I can recommend the endeavor as an interesting if time consuming way to take advantage of policies that encourage such activity, but over the long haul you will eventually want to switch to more traditional avenues of financial security.
The difficulties that one would encounter in building any significant equity or cash flow from rental properties or flipping is massively compounded by not being near by. If you try to get a "property management company" involved that really cuts into profit. Similarly relying exclusively on "full service general contractor" to flip a property makes for an uncomfortable small profit margin. There is no substitute for the "sweat" part of DIY equity building or landlord path. Frankly if you have your heart set on being involved in the broad range of real estate investment but need / want to do remote the better path is almost certainly a narrowly focused REIT. There are some very high yielding choices -- Top 38 REIT - Residential Stocks For Dividend Income - Dividend.com
If are addicted to the "casino level" returns that some "guru" types pitch in their sales material I must caution that this brief summary (aimed at Canadians but applicable to all gamblers...) will help explain who really is paying for the lights, the fountains, and all the other opulence -- 6 Things Casinos Don't Want You to Know About Your Odds*|*Reader's Digest
There is great appeal at a certain stage of your life in having real estate as a "tangible asset" but as you see the pitfalls of how easily such value can be wiped out, but forces outside of your control, you realize that it really is not all that different than the way that forces outside your control in the financial markets can also wipe out value. The big advantage is that once you have a significant asset base there are tools that can limit the downside of financial investments. Efforts by Case-Schiller to popularize a similar hedge for real estate have largely not been successful. Hedge your real estate investments against losses | Property hedging strategies Because of fundemental non-fungibility even in high rises and such (condo on lower level is NOT a fair substitute for one with views among other things...) I do not believe there will ever be a way to truly lower the risk of real estate...
If you have any ability to tackle projects closer to home (wherever that might be) AND benefit from obvious opportunity to translate "sweat into dollars" by cleaning-up, repairing and redecorating homes or apartments on your own I can recommend the endeavor as an interesting if time consuming way to take advantage of policies that encourage such activity, but over the long haul you will eventually want to switch to more traditional avenues of financial security.
Thanks for your words of advice, I really appreciate it.
I have investment properties in other cities and other countries. I am not interested in flipping, I prefer to invest and hold for a long time. I'd be using my play-around money - these are cash that if completely wiped out, would have no impact on my life other than a few hundred thousands gone; and I've lost more money that than in other investment.
My motivation for investing is 1) diversification and 2) the potential I see in Chicago. I do have investment in REIT but I want to explore Chicago. It's possible I will find it an inhospitable place to invest, but I want to find out by putting my foot in.
.
There are all kinds of things that some folks consider "diversification" but most analysis I have seen suggest the same forces that influence REITs also drive prices of private real estate in identical directions -- https://institutional.fidelity.com/a...L=/9858228.PDF
Quote:
Over a full real estate cycle, many of the vehicle-specific effects
of REITs and private real estate cancel out because their returns
are exposed to the same common drivers and, therefore, tend to
move together.
Perhaps your "play around money" can get you a spot at the newest "playground" scheduled for Chicago -- Vista : Lifestyle
There are all kinds of things that some folks consider "diversification" but most analysis I have seen suggest the same forces that influence REITs also drive prices of private real estate in identical directions -- https://institutional.fidelity.com/a...L=/9858228.PDF
I don't disagree with the study. By diversification, I am looking more at location diversification; as in not having all my properties in one region. While housing and the market generally do move in similar fashion, I notice there are variations in different housing markets. Sometimes different regions can move in opposite directions.
Quote:
Originally Posted by chet everett
Perhaps your "play around money" can get you a spot at the newest "playground" scheduled for Chicago -- Vista : Lifestyle
Enjoy your visits!
Thanks. The place looks awesome!!
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Fairly easy to find these things even from afar...
