Bronzeville Mural

Bronzeville Real Estate Analysis – 2019

Bronzeville Single Family Homes

Bronzeville Single Family Homes sold well in 2019.
A total of 112 homes were sold. This is up 33% versus 2018.
The average selling price for a single family home was $486,975.
The average selling price was up 18% versus the previous year.
The average market time increased by 23 days versus the previous year.

Bronzeville Condos

Bronzeville Condos also sold well in 2019.
A total of 272 condos were sold. This is up 12% versus 2018.
The average selling price for a Bronzeville condo was $199,455.
The average selling price was up 5% versus the previous year.
The average market time decreased by 4 days versus the previous year.

Bronzeville 2 to 4 unit buildings

39 multi-unit properties were sold in 2019.
That is an 8% increase versus 2018.
The average selling price was $341,995.
The average selling price was up 15% versus the previous year.
The average market time decreased by 73 days versus the previous year.

Bronzeville Rentals

244 units were rented in 2019.
That is a 24% increase versus 2018.
The average rental price was $1,530.
The average rental price was actually down 4% versus the previous year.
The average market time increased by 5 days versus the previous year.

Bronzeville Land

19 parcels of land were sold in 2019.
That is a 27% decrease versus 2018.
The average selling price was $90,289.
The average selling price decreased by -44% versus 2018.
However, this may not be an apples to apples comparison.
This is because every parcel of land is a different size.
Land value is driven largely by location, square footage and zoning type.

Summary

Overall, 2019 was a great year for Bronzeville real estate.
The biggest gains were seen in the Single Family Home category.
Values for Single family homes were up 18% in 2019.
This was driven largely by sales of new construction homes.

Multi-Unit properties also appear to be in great demand.
Values are up 15% versus the previous year.
Also, the average time it took to sell a multi-unit property was
cut in half versus 2018.
This is an indication that demand for this property type is high.

Contact Mark

If you have any questions about Bronzeville real estate,
please call or text me at 773-354-6693.

Thanks, Mark Killion
Kale Realty – Chicago, IL
Cell: 773-354-6693
email: mark@markkillion.com
website: www.buybronzeville.com

Mark Killion, Realtor

Chicago Cap Rate – Heat Map

Hello to all my blog readers out there!

Here is a heat map of Chicago Cap Rates by neighborhood.

Neighborhoods with a darker shade, have higher cap rates.

If a neighborhood has a lighter shade, it means the cap rate is lower in that area.

If a neighborhood has no shade at all, it means there were no multi-family sales for the time period.

This sales data was taken from the Multiple Listing system.

The median cap rate in Chicago is about 6.8%.

I spent a lot of time putting this heat map together,

so I hope you find this information useful.

If you have any questions, please send me a note: mark@markkillion.com

You can also text me at 773-354-6693 or visit me online at: www.buybronzeville.com

Thanks,

Mark Killion, Real Estate Broker

Kale Realty – 2447 N Ashland Ave – Chicago, IL 60614

Cell: 773-354-6693

Office: 312-939-5253

Visit me online today: www.buybronzeville.com

Equal Housing Opportunity

Chicago Multi-Family Income Property

Hello to all my blog readers out there!

I am back with some more great information for you.

I just analyzed the last 2 years of sales information for Chicago multi-family properties.

My main goal was to derive Chicago cap rates by neighborhood.

There is not a lot of good cap rate information out there by neighborhood.

But, I was happy to find that my last post about Chicago cap rates is still ranking high on Google!

What is Cap Rate?

Here is a refresher on the concept of Cap Rates.

According to Investopedia:

“The capitalization rate, often referred to as the “cap rate”,

Capitalization Rate = Net Operating Income / Current Market Value”

Please keep in mind that this is a high level analysis.

It should give you a ballpark idea of cap rates in the various Chicago neighborhoods.

But some assumptions were made for this analysis.

For example, to determine the net income for a property, I assumed it would be 50% of the Gross Rental Income.

Also, I tried to weed out properties that require a significant amount of rehab work.

Typically those properties will sell below market value and they will make the cap rate look deceptively high.

I also tried to weed out properties that were vacant.

In this year’s analysis, I included the number of properties that were sold in that neighborhood for the time period considered. So if only 1 or 2 properties were sold in the 2 year period, I would not be extremely confident in the displayed cap rate.

However, if several properties were sold in the 2 year period, you can have a higher level of confidence in the displayed cap rate.

If you are considering purchasing an investment property in Chicago for $300,000 or more, I would be happy to do a more detailed analysis for you. Of course, this is assuming I would be your buyer’s agent and represent you in the transaction. As much as I enjoy helping others, I have to keep the lights on

Either way, I hope you find this information useful.

Feel free to leave a comment here… or send me a note: mark@markkillion.com

You can also text me at 773-354-6693 or visit me online at: www.buybronzeville.com

Thanks,

Mark Killion, Real Estate Broker

Kale Realty – 2447 N Ashland Ave – Chicago, IL 60614

Cell: 773-354-6693

Equal Housing Opportunity

Chicago Cap Rates by neighborhood

Chicago Cap Rates by neighborhood

Chicago Cap Rates by neighborhood

Chicago Cap Rates by neighborhood

Chicago Multi-Family Income Property

Hello to all my blog readers out there.
I know it has been a while, but I am back with some valuable information!
I analyzed 2 years of sales transactions for Chicago
Multi-Family apartment buildings.
I wanted to find out the average cap rates by neighborhood.
This is one of my most popular reports.

This report is based on MLS data for the period of
01/01/2015 through 12/31/2016.
The MLS system is used to list and sell properties that are brokered
by a licensed real estate agent.
So this analysis does not include properties that were sold “off market”.
But the MLS includes about 90% of all sales transactions.

As a refresher, let’s talk about cap rates right quick.
According to Investopedia, Cap Rate is defined as follows:

“The capitalization rate is the rate of return on a real estate
investment property based on the income that the property is
expected to generate. The capitalization rate is used to estimate
the investor’s potential return on his or her investment.

The capitalization rate of an investment may be calculated by dividing
the investment’s net operating income (NOI) by the current market value
of the property, where NOI is the annual return on the property minus all
operating costs. The formula for calculating the capitalization rate can
be expressed in the following way:

Capitalization Rate = Net Operating Income / Current Market Value”

For more info on cap rates, please visit:
http://www.investopedia.com/terms/c/capitalizationrate.asp

To derive cap rates for my report, I looked at the stated gross income for each property.
I then assumed the expenses would be 50% of the stated gross income.
This is known as the 50% rule.
It gives you a quick way to analyze properties at a high level.
So this analysis assumes that for multi-family properties your expenses
will be about half of your revenue.
On average, this is about right. Once you have your net income, you divide
it by the selling price to get the Cap Rate.
So if a property has a annual net income of $100,000 and it sold for 1 million dollars,
it has a cap rate of 10.
Note: If a property had a stated gross income of $0, it was not included in this analysis.

Generally speaking, neighborhoods with high appreciation rates have lower cap rates.
And neighborhoods with high cap rates will usually have low or flat appreciation rates.
These two metrics are inversely related and I think this report highlights that relationship.

If you are thinking about buying or selling an investment property in Chicago,
please let me know! You can send me a note: mark@markkillion.com

Until the next time,

Mark Killion
Kale Realty
2447 N. Ashland
Chicago, IL 60614

Office: 312-939-5253
Cell: 773-354-6693

Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY

The report is shown below:

Cap Rates, by neighborhood, for Chicago Multi-Family Properties 2017

World Class Golf Course coming to South Shore Chicago

The news just keeps getting better for the South Shore Chicago neighborhood.
Tiger Woods has agreed to design a golf mecca on the south side of Chicago.
The goal is to have professional televised golf tournaments played there.
That is a lofty goal indeed!

I read that President Obama called Tiger Woods and asked him to design
this new course as a personal favor.
I am sure Mayor Rahm Emanuel made some moves behind the scenes as well.
(For instance, there was no public vote or input on the matter)

Tiger Woods and President Obama discussing the South Shore Golf course.

It sounds like it will extend from Jackson Park near 67th and Stony Island
all the way to the South Shore Cultural Center on 71st Street and South Shore drive.
This is a very beautiful stretch of real estate. It has stunning views
of the Lake to the east and the Chicago skyline to the north.

The total project is expected to cost around $30 Million dollars!
80% of that is expected to come from private investors.
The project will start in mid 2017 and it will take about 3 years to complete.
Combine the new golf course with the new Presidential Library, and I think
we are about to see a chain reaction of commercial investment in South Shore Chicago.

This is really great news for the South side of Chicago and the city in general.
It will definitely have a positive impact on local real estate values.
I think South Shore is a great place for real estate investments.

Several real estate investors have asked me about the South Shore neighborhood recently.
If you are thinking about picking up an investment property or two,
South Shore should definitely be on your radar.

Prices are still reasonable and the long term outlook is great.
If you have any questions about buying South Shore Chicago real estate,
please let me know!

South Shore Real Estate Listings

Until the next time,

Mark Killion
Kale Realty
2447 N. Ashland
Chicago, IL 60614

Office: 312-939-5253
Cell: 773-354-6693

Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY

South Shore Chicago Cap Rates

I just did a quick analysis of closed transactions for South Shore Chicago.
I focused on Multi-Family Apartment Buildings only.
This was for sales that took place in 2016.
About 20 transactions closed on the MLS this year.
The estimated median Cap Rate in South Shore was 10.9%

I estimated the Cap Rate by looking at the Gross Income.
I then assumed 50% expenses to get the Net Income.
I like doing this because some sellers may play with the expenses
to make them look lower than they really are.
Many feel that the 50% rule is a pretty good estimate of expenses.
Then I divided the estimated Net Income by the Selling price.
So I arrived at a median Cap Rate was 10.9%
So this should give you a good idea of where Cap Rates are in the
South Shore neighborhood.
If you have any questions about buying or selling investment
properties in South Shore, you can send me a text (or call)
Mark Killion 773-354-6693.
You can also send me an email: mark@markkillion.com

Until the next time,

Mark Killion
Kale Realty
2447 N. Ashland
Chicago, IL 60614

Office: 312-939-5253
Cell: 773-354-6693

Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY

High Cap Rate Chicago – 7 property package

Calling all investors!
This package is a money maker!
7 properties, 9 units total.
The properties are rented to Section 8 voucher holders.
Guaranteed Income!
Asking $270K with annual NET income of $56K!
Contact me for more info!

Mark Killion
Kale Realty
542 W. Roosevelt Rd
Chicago, IL 60607

Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY

A Bronzeville Investment property that recently sold for $375,000

Available Bronzeville Investment Properties

Let’s look at buying an investment property in the Bronzeville neighborhood.
We will focus on Two-to-Four Unit investment properties.
I like to analyze properties that are fairly turn-key investments.
This means that the units are in decent condition and they are already rented out.

Of course, you can find fixer upper properties that are not yet rented.
But those are harder to analyze, because there are so many unknowns
(i.e. cost of repairs, building permits, length of time to find tenants, etc).

It is nice to see that the Bronzeville real estate market is alive and well.
Bronzeville usually has a limited supply of available investment properties.
I would say that the demand for quality investments far exceeds the supply.

Owners of Bronzeville properties tend to hold on to them for long periods of time.
So the turnover of properties in Bronzeville is lower than in some other neighborhoods.
But, I found 5 recent comps for this analysis, so this will give us a good idea of
the current market.

Here are the details of the 5 investment properties:

1) Price: $390,000 .. (4 units – 14 beds)..Gross Income: $57,084.. GIM: 6.83
2) Price: $380,000 .. (3 units – 11 beds)..Gross Income: $54,960.. GIM: 6.91
3) Price: $375,000 .. (4 units – 11 beds)..Gross Income: $52,500.. GIM: 7.14
4) Price: $331,000 .. (3 units – 8 beds) ..Gross Income: $37,620.. GIM: 8.80
5) Price: $317,000 .. (2 units – 7 beds) ..Gross Income: $32,400.. GIM: 9.78

Property #3 is right in the middle and it represents a typical Bronzeville
investment property. Property #3 will be the subject of this analysis.
Now let’s dig into the numbers:

Income

This property sold for $375,000. It was fully rented and generating an annual
income of $52,500. Here is the income of each unit:

1) 2bed/2bath $950
2) 3bed/2bath $1,110
3) 3bed/2bath $1,020
4) 3bed/2bath $1,295

Each unit was recently rehabbed with hardwood floors and updated kitchens.
Total monthly income was $4,375.
There is also room to increase rents every year until they are at the market rate.
The current market rate for a rehabbed 3bed/2bath unit in Bronzeville is $1,500.

This building’s “Gross Income Multiplier” was a little over 7.
This just means that if you multiply the annual rental income by 7,
you will arrive close to the selling price. So right away, we have
a good metric to use when searching for potential properties in Bronzeville.
This metric is also known as the GRM (Gross Rental Multiplier).

This is also a useful metric if you are thinking about selling and you own a
4 unit property in Bronzeville. Multiply your annual rental income by 7 and
that will be a good estimate of its current market value.

Expenses

Now let’s dig a little deeper and analyze estimated annual expenses:

Property Management: $5,250
Repairs: $3,750
Taxes: $3,600
Vacancy: $2,625
Collections: $2,625
Insurance: $2,000
Water Bill: $1,500
Landscaping: $1,200
===============================
Total Annual Expenses: $22,550

So our estimated annual expenses come to $22,550. This is about 43% of our
Gross Income. I think typical expenses for this type of property will run you
between 40% and 50%.
So our estimate looks pretty good.

To get our Net Income, we just subtract expenses from our gross income.
Net Income = $29,950

Cap Rate

Using our Net Income, we can calculate our “Cap Rate”. Cap Rate, short
for capitalization rate, is defined as [Net Income] divided by [purchase price].
So using this formula, we find that our Cap Rate for this property is 8%.
You may see the term “Cap Rate” quite a bit when you start looking for investment properties.
It gives you a way to compare different investment opportunities.
But it is just a “rule of thumb” metric that will help filter out bad investments.
One thing that has a huge impact on the “Cap Rate” is the amount of expenses.

If the owner is understating the expenses, it can skew the Cap Rate and
make it look higher. On the other hand, if the owner had a huge one time
expense last year (replaced the boiler), it can make the Cap Rate look lower.
When you are doing your analysis, if you estimate expenses at about 40%,
I think you will be OK.

In Bronzeville, most of the good investment properties will have a Cap Rate of about 8%.
Some will be higher, some will be lower. But the average Cap Rate in Bronzeville is about
8% to 9%. In other neighborhods where purchase prices are higher, the cap rates will be lower.
Hyde Park is a great example. Cap rates in Hyde Park are about 6%.
OK… enough about Cap Rates, let’s continue.

Cash Flow

So now we have about $30,000 in annual net income.
That is decent income for one property, but how much cash flow will be generated?
What is cash flow you say? Cash flow is what goes in your pocket!
It is your Net Income minus your mortgage payments (debt service).
If you bought the property in cash, then obviously your Net Income is your cash flow.
But most investors will use a mortgage when purchasing a property.

SCENARIO #1

So if we get a conventional loan and put down 20% ($75,000), our monthly payment will
be about $1,520. This assumes the loan had a 4.5% APR.
Once we subtract the mortgage from our monthly net income, we are left with
$976 every month. This means our annual cash flow is $11,710.

This may not sound like a lot of cash flow for a $375,000 property, but remember,
we financed this property.
Our actual cash invested in this property is $75,000 plus closing costs.
If we figure closing costs to be about $4,000, then our
cash-on-cash return on investment (ROI) is 14.8%.

That is pretty good considering Bank of America is currently only paying
.07% interest for a CD.
To put that in perspective, our $75,000 would only earn a measley $52 per year.
That is $52 per year vs $11,710 per year!
Of course, CDs are easier to manage. They don’t stop up the toilet or lock
themselves out at 2 AM. But we are paying $5,250 per year for a property manager.
That way we don’t have to deal with any tenant issues directly.

SCENARIO #2

Another option when buying this type of property would be to live in one of the units,
and rent out the rest. If you take this option, you can qualify for a FHA insured loan.
FHA loans only require a 3.5% down payment. In this case, that would come to $13,125.
Of course, the property’s annual income, and cash flow, would drop because you are
living in one of the units. But you would be living rent free. So saving $1,000 per
month on rent has the same impact on your finances as having $1,000 monthly cash flow.
This is the ideal situation for a 1st time investor. Let the tenants pay off your
mortgage and help you build equity over time.

Well that is enough number crunching for now.
I hope you found this information useful.
If you are thinking about buying or selling an investment property in Bronzeville,
please send me a note: mark@markkillion.com

Bronzeville

Available Bronzeville Investment Properties

Until the next time,

Mark Killion
Kale Realty
542 W. Roosevelt Rd
Chicago, IL 60607

Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY

Shops and Lofts at 47th – Bronzeville

More building permits were given out in October 2013 than in any other month during the
past five years! This is a great sign for the real estate market. Hopefully this
momentum will carry over into 2014.

This spike in building permits is being driven by the demand for multi-family housing.
Permits for multifamily units surged 15 percent in October 2013. I suspect that the
multi-family or apartment building segment will be the fastest growing segment of real
estate for the next several years.

It is also interesting to note that according to the respected Case-Schiller index,
Chicago Home prices are also up. The year over year change in single family home prices
in Chicago is almost 8%.

So things are looking up for the Chicago Real Estate market!
If you have any questions about the Chicago Real Estate market,
please feel free to send me a note: mark@markkillion.com

Until the next time,

Mark Killion
Kale Realty
542 W. Roosevelt Rd
Chicago, IL 60607

Send me a note!

Visit me online: www.773property.com

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Chicago Apartment Building For Sale

Hello to all my blog readers out there. Today I want to take a look at a
Chicago Multi-Family property that is currently on the market. This
property is near 48th and Archer. It is listed by Eliseo Guzman , RE/MAX United.

I think that this property would make a nice addition to your portfolio.
But, we won’t know for sure until we run the numbers.
This 12 unit property is listed at $800,000. 10 units have 2 bedrooms and
1 bathroom.
The other two units are one bed/one bath. This property has been on the
market for almost 2 months. The gross scheduled income is $118,200.
This is a good location. It is close to Midway airport, public transportation,
and the I-55 expressway.
Let’s take a look at our key metrics:

Asking Price: $800,000
Gross Rent Income (GRI): $118,200
Gross Rent Multiplier (GRM): 6.77
Net Operating Income (NOI): $73,415
Cap Rate: 9.2%
Cap Rate at 92% of Asking Price: 10%
Number of Units: 12
Price per unit: About $66,000
Year Built: 1971

Expenses

Taxes________________________$$8,450
Repairs (7.5%)__________________$8,865
Vacancy and Collections (5%)________$5,910
Insurance_____________________$4,300
Electricity_____________________$1,150
Scavenger_____________________$3,000
Water________________________$3,000
Landscaping & Snow Removal_______$1,800
Property Management (5%)________$5,910
Pest Control___________________$1,200
Advertising______________________$600
Miscellaneous_____________________$600
=======================================
Total Expenses: $44,755

Based on my estimates, the expenses are running
at about 38% of gross rental income or $44,755.
This will give us a net operating income of $73,415.
When we divide the Net Operating Income by the asking price of $800,000,
we find that we have a cap rate of 9.2%.
If we adjust the purchase price down to 92% of asking price, we have an
attractive cap rate of 10%. Also, keep in the mind that the property
is in an ideal location, close to the airport, expressways, and public
transportation.

As you can see, the purchase price and the cap rate are inversely related.
If you want a higher cap rate, then you need to offer less for the property.
After you purchase the property, if you want to increase the cap rate, then
you need to increase the Net Operating Income. This can be done by
raising the rents, increasing non-rental income (i.e. vending machines, coin laundry, etc.),
or by reducing the expenses (improve collections, fix leaky faucets, etc.).

So at a 9% to 10% cap rate, I definitely think this property warrants further investigation.
As a buyer’s broker, I can assist you with purchasing this property or any
other multi-family property that is listed on the Chicago MLS. I am licensed to sell
real estate in the state of Illinois. Just send me your search parameters and I can
send you properties that meet your acquisition criteria. For more information, please
send an e-mail to mark@markkillion.com.

Until the next time,

Mark Killion
Kale Realty
542 W. Roosevelt Rd.
Chicago, IL 60607

Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY