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The Pros and Cons of Investing in South Side Chicago Real Estate

Real estate is the preferred long-term investment for 35% of Americans. That puts real estate ahead of stocks and mutual funds in terms of where US investors want to put their money.

The fact is, real estate is unrivaled when it comes to stability. It’s the reason the industry has churned out far more millionaires than most other investment avenues.

Successful real estate investors have a knack for spotting the right market and putting their money there. In recent years, an increasing number of investors have focused on South Side Chicago real estate, and it’s easy to see why. The market is one of the hottest in America today.

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Of course, you’ll want to do a bit of research before putting your money in this part of the country. In this blog, we highlight some of the top pros and cons of South Side Chicago real estate. This way, you can make a more informed decision.

Why Should You Invest in South Side Chicago Real Estate?

There are many perks that come with investing in South Side Chicago real estate. Here are four of them.

There’s a Strong Renters’ Market

For investors looking for a steady source of passive income, purchasing a rental property is the way to go. The South Side Chicago has a huge renters’ market. There are several reasons for this.

Over the years, house prices have risen significantly, making it more difficult for first-time buyers to purchase homes. As a result, many people moving into the city opt to rent homes.

With rising demand for rental spaces, rent prices have gone up throughout the city, making this type of property more profitable for investors. In 2021, the median rent for a one-bedroom apartment was $1,190 per month.

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There’s also the fact that Chicago’s population has grown steadily over the last decade, and the trend is set to continue. That means that there’ll be no shortage of people looking to rent apartments and homes in the city.

Moreover, the fact that Chicago has a rich cultural heritage and a thriving social environment makes it highly attractive to renters. The South Side offers a wealth of gorgeous parks, excellent learning institutions, world-renown landmarks, and professional sports teams.

Assured Gain in Property Value

Another benefit you get from South Side Chicago real estate investing is that your investment will not lose value. If the rising property prices in the area in recent years are anything to go by, you can expect the value of your property to increase significantly in the future.

That said, it’s still important for investors to carefully evaluate the market niche they want to get involved with. In the recent past, many luxury developments have sprung up around Chicago, forcing property owners to begin to provide concessions to tenants. You can expect these concessions to affect the overall property value in this area over time.

If you choose to focus on single-family homes to rent out, you won’t need to worry about unstable property prices. People who buy fixer-upper homes can especially look forward to a significant increase in their home’s value. Click for more information on where to find the best fixer-upper homes on the South Side Chicago.

It’s a Great Opportunity to Diversify Portfolio

For investors who’ve already put money into other types of investments, such as stocks, bonds, and annuities, South Side real estate offers an opportunity for diversification. And with this region being highly competitive, you can always be sure that your money will generate good returns within no time.

Diversifying your portfolio offers an additional layer of protection against market volatility. You also get to take advantage of upswings in the market.

Drawbacks of Investing in South Side Real Estate

Part of being a smart real estate investor is knowing what drawbacks come with putting your money into Chicago South Side real estate. Here are just two of them.

High Taxes.

Lately, taxes in the Chicago area have become a major concern for real estate investors. In recent years, the taxes in this area have experienced a double-digit increase per year, based on the location of the property and its assessed value.

As you invest in rental property in this region, you’ll need to factor in the rising cost of taxes. Don’t make the mistake of just looking at the area’s monthly rent as pure net profit.

Larger Initial Expense

Across America, property prices have gone up over the last few years. Sure, home prices in Chicago have grown at a lower annualized rate than the national average, but these prices are still considerably high. In 2020, home prices in Chicago grew at an annualized rate of 6.6 percent. Agents may utilise Showcase IDX to manage their listings, promote them, and attract new customers. Find out properties derived from ShowcaseIDX best practices (click for details).

As a result of high property prices, investors have to look for a bigger initial cash outlay to make an investment. They have to find a bigger mortgage, which is not always easy. For people just getting into the real estate business, the cost of multi-family properties may prove prohibitive.

Navigating South Side Chicago Real Estate Doesn’t Need to Be Hard

You’ve probably heard a lot of good things about South Side Chicago real estate, and they’re all true. The area’s lucrative renter market, coupled with its potential for gaining value over time, makes it a real estate investor’s destination. But before you start to snap up property in the area, it’s wise to know the potential downsides of doing so as well, so that you make better-informed decisions.

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