Chicago or Suburbs: Where Do Investors Get More Rental Applications?

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Author: Mark Ainely | Partner GC Realty & Development & Co-Host Straight Up Chicago Investor Podcast

I love digging into this lease data because every investor has an opinion and the data tells the facts.  Between the 1400+ units GC Realty & Development manages and the investors we talk to on Straight Up Chicago Investor Podcast we engage in these conversations weekly. City landlords will tell you Chicago gets more interest because of population density. Suburban landlords will tell you their listings attract more serious applicants. Everybody has a theory, nobody has the experience on both sides or simply has the data.

We do!

We pulled over 700 completed leases from our portfolio and compared the number of applications each listing received, broken down by Chicago proper versus the suburbs. What we found might settle the debate once and for all. Or more accurately, it might end the debate entirely because the answer isn't what either side expects.

The Head to Head Numbers

Look at those numbers. The averages are close. The medians are identical. The percentage of listings pulling 5 or more applications is virtually the same. Even the percentage of listings that struggled to attract interest (only 1 application) is nearly identical at 14% for Chicago and 13% for suburbs.

If we stopped here, the honest answer to the headline question would be: it doesn't matter. You're going to get roughly the same applicant interest whether your property is in Logan Square or Schaumburg.

But we didn't stop here. Because when we broke the data down by rent range, the story got a lot more interesting.

The Real Answer: It Depends on Your Rent Range

This is where the real insight lives.

Below $2,000 per month, Chicago dominates. Listings in the city priced under $1,500 average 5.9 applications, compared to 4.7 in the suburbs. Bump that up to the $1,500 to $1,999 range and Chicago pulls even further ahead at 6.5 versus 4.9. If you own affordable rental housing in Chicago, you are not going to have trouble finding applicants.

Above $2,000 per month, the suburbs take over. In the $2,000 to $2,499 range, suburban listings average 5.5 applications versus 5.0 in the city. At $2,500 to $2,999, the gap widens to 5.4 versus 4.2. Suburban renters in that price range have more housing options competing for their attention in the city, but fewer quality options in their preferred suburban communities, which drives more applications per listing.

At $3,000 and above, both markets converge and drop off. Chicago averages 4.1, suburbs 3.9. At this price point, your applicant pool shrinks no matter where the property is located. Tenants paying $3,000 or more per month tend to be more selective, take longer to commit, and have fewer competing applicants for each unit.

What This Actually Tells You

The takeaway here isn't "invest in Chicago if your rents are low" or "invest in the suburbs if your rents are high." The takeaway is that the application volume you see is directly tied to how your property is priced relative to the local market, not simply where it's located.

A well priced $1,400 rental in Pilsen is going to get flooded with applications. A well priced $2,200 rental in Naperville is going to get strong interest. An overpriced $1,800 rental in either location is going to sit there and collect maybe one or two apps while you wonder what went wrong.

The 14% of Chicago listings and 13% of suburban listings that received only a single application? Those aren't a geography problem. In most cases, those are a pricing problem. When a property is priced right for its market, the applications come. When it's not, they don't. The data is pretty clear on that.

Pricing Right Is the Whole Game

Here's the thing that gets lost in the city versus suburbs conversation: the number one factor that determines how many applications your listing receives is not location. It's price.

Location determines your pool of potential tenants. Price determines how many of them actually apply. You can have a property in the hottest rental neighborhood in Chicago, but if you're listed $200 above market, your application count will look like a property in the slowest suburb. We see it in our data over and over again.

The investors in our portfolio who consistently get 5, 6, 7+ applications per listing aren't the ones in the "best" locations. They're the ones who price accurately from day one. They trust the data, list at market, and let the applicant pool come to them. They rarely need price drops, they fill vacancies faster, and they end up netting more over 12 months than the investor who listed $150 higher and sat vacant for an extra three weeks.

If you're not sure where your property should be priced, that's something we can help with. We offer a free rental analysis for any property in the Chicago metro area. No obligation, no strings. We'll pull comps, factor in the specific characteristics of your property, and give you a realistic rent range based on what the market is actually doing right now. Not what Zillow says, not what your neighbor's cousin got two years ago. Real numbers based on real data.

Don’t Go At This Alone

This is a lot of information you need to know if you plan to invest in the Chicago market and it may seem overwhelming, but real estate investing in Chicago is a team sport. Who is on your real estate investing team? Do you even have a team? GC Realty & Development has a team of resources and we are willing to share all of our 20+ years of experience in both real estate investing and property management in the Chicago market. We will do this whether you hire us or not.

What gets me up in the morning and keeps me going 12+ hours a day is the ability to add value to Chicago real estate investors. If we connect, you will hear me say that our goal as a company is to add value to everyone we come in contact with. In return, we hope one day you will hire us for our Tenant Placement or Property Management Services. You can also refer us to someone you know that needs Tenant Placement or Property Management services, or I will take a simple 5 Star Google review. We love the opportunity when we get all three from the current and aspiring investors we get to help!

Reach out today!

Partner / Co-Host of Straight Up Chicago Investor Podcast

GC Realty & Development, LLC manages over 1,400 investment properties across the Chicago metropolitan area. This analysis is based on proprietary leasing data from over 700 completed leases in our portfolio. Chicago's Responsive Property Manager®.

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