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Author: Mark Ainely | Partner GC Realty & Development & Co-Host Straight Up Chicago Investor Podcast
I jumped on a podcast with Gabe from Seattle on a Friday, and he came in hot with what he called “good Friday energy.” I’ll take it.
We ended up having a real conversation about what is actually making investors money right now, what is quietly killing deals in Chicagoland, and why some of the best opportunities are hiding in plain sight.
The “hidden asset class” we talked about is industrial.
But if you are a Chicago landlord, the bigger takeaway is not “go buy a warehouse.”
It’s this: the people building real wealth are the ones who understand risk, pricing, and process. And in Chicago, those three things matter more than your opinion does.
If you want to check out Gabe’s show and support what he’s building, you can find it here:
https://www.therealestateinvestingclub.com
Now let me walk you through what we talked about and what I think Chicago landlords should do with it.
I’m a deal junkie, and property management feeds that addiction
Gabe asked me early on what drives me, and the honest answer is the action.
In property management and investing, something is always happening:
a deal dies and you have to save it
a repair goes sideways and you have to fix it fast
a resident problem pops up and you have to make a decision
a vendor drops the ball and you have to solve it without drama
Nobody calls your property manager to say, “Hey, just wanted to let you know you’re doing amazing.”
They call because something is wrong.
That is also why Chicago landlords get exhausted. Self management turns you into the on call department for every problem, every weekend, forever.
Property management did not start as some master plan
I got into real estate the way a lot of people my age did. I flirted with a bunch of career ideas, and I landed on stockbroker for all the wrong reasons. Wall Street, money, Hollywood nonsense.
Then online trading showed up, and it was obvious that industry was changing fast. So I pivoted into real estate, thinking I’d become that landlord with 100 units.
I bought my first investment property, screwed it up badly, and I told myself, “I’m never owning property again. I’ll just be a broker.”
Then something happened that I think is hilarious in hindsight.
I was selling investment properties and everyone kept asking, “Will you manage it?” I kept saying no.
My attorney finally said, “I’m going to pay you to manage this.”
And I remember thinking, if he pays me 50 bucks a month, at least I can get a water cooler for the office. Then someone else asked, and now it’s 100 bucks a month and we can cover the electric bill.
That’s how it started. Property management as a means to an end.
Then the market crashed, we did a ton of investing, and property management just kept growing in the background.
We did a lot of class D investing. We did about 400 deals. We did 482 BRRR properties.
It was not until around 2014 that we got serious and said, “We are a property management company.” At that point we had 400 to 500 units, and we needed real process.
And that is a lesson for every Chicago landlord: your portfolio does not magically get easier with time. It gets easier with systems.
What a property manager really does in Chicago: lower risk and buy back time
When Gabe asked about the value of property management, I kept it simple. A good property manager provides two things:
Lower your risk
Buy your time back
Chicago is heavily regulated. It is not just “Chicago rules,” either. It’s counties, municipalities, local ordinances, different timelines, different expectations.
One stupid mistake in a regulated market can put you in court for two times the security deposit plus attorney fees.
That is not fear. That is the reality of operating here.
If you want to lower your risk as a Chicago landlord, you need tighter standards in three places:
tenant screening
documentation
move in and move out process
That’s why these resources exist, and why they matter when the stakes are high:
Mastering Tenant Screening Guide
https://www.gcrealtyinc.com/chicago-tenant-screening-mastery-guide
Move In Move Out Checklist
https://www.gcrealtyinc.com/move-in-move-out-checklist
No hype. Just fewer costly mistakes.
How industrial became the “hidden asset class” for us
We got into industrial through property management relationships.
We were managing commercial space early on, about half a million square feet, and I’ll be honest, it was some fake it till you make it in the beginning.
But here’s what happens when you manage industrial for owners who built those buildings in the 70s and 80s.
They get older. Their partnership group gets older. Their kids do not want the buildings. So they sell.
And if you are already managing the property, you are often first in line to buy it.
That is how we got our early jump into industrial.
Then the broader market took over.
Back around the Great Recession, industrial had 15 to 17 percent vacancy.
Now it’s more like 3 to 4 percent in the Chicago market.
That is a massive shift.
Distribution centers, data centers, and everything tied to online commerce is taking up space. On top of that, industrial buildings get torn down and replaced with huge projects that often sit in the same zoning bucket.
Those huge projects can eat up the footprint of 10 or 12 smaller industrial buildings, which shrinks supply even further.
That supply squeeze is one of the reasons industrial has quietly made a lot of people a lot of money.
Why we buy older industrial instead of shiny new warehouses
We like the older stuff. 60s, 70s, 80s. Twelve foot clear, maybe 14 foot if we are lucky.
Not the beautiful 20 foot clear, massive, modern warehouse.
Here’s the reason: replacement cost.
With regulations, fire codes, setbacks, and zoning, we buy these older buildings for 90 to 100 dollars per square foot.
You cannot build them today for less than about 250 dollars per square foot.
That gap matters.
When you own something that is expensive and difficult to replace, you have leverage over time.
That idea applies to Chicago rentals too. Zoning and building codes make it hard to build anything “cheap” here. That’s a big part of why housing stays tight.
Triple net is great, but tenants still want predictability
I love triple net. We have a couple triple net investments.
But a lot of our industrial tenants are in the 3,000 to 6,000 square foot range. Sign companies, plumbers, contractors.
They like predictable rent.
So a lot of times we use modified gross with stops:
base rent is set
we set a tax stop and an insurance stop at the current level
if taxes or insurance rise above that, the tenant covers the increase during the term
That structure keeps the tenant happy and protects the owner from the silent killer: rising expenses while rent stays flat.
The Chicago underwriting problem that scares me the most: Cook County taxes
People outside Illinois hear “Cook County” and think about Chicago headlines.
I think about unpredictable taxes.
We stay out of Cook County for industrial because I’ve watched taxes go from 3 dollars a square foot to 8 dollars a square foot, then you spend two years fighting to get it back down, you get a refund, and then it jumps again.
That kind of volatility destroys underwriting.
We prefer areas that are more conservative and at least predictable.
When Gabe asked which county I’m most excited about in the Chicago market, I said DuPage County.
A lot of people ignore it because they get distracted by high cap rates in other pockets. Those numbers look sexy on paper, but the real world is a different story.
The small extra income stream most investors miss: truck parking
If you have a larger lot or outside storage, it can be a big deal.
Truck parking is huge in Chicago. If you have extra space, you can charge around 250 to 450 per semi parking spot.
Even on a small level, if you can fit two or three trucks in a back corner, that can turn into meaningful annual income that drops straight to the bottom line.
How we find deals now: relationships, mailers, and wholesalers
We find deals the Chicago way.
Relationships and rapport still matter. Brokers, bankers, networking.
We also started buying some industrial buildings through outbound mailers. That surprised Gabe because he said mailers worked well for him in single family, but commercial mailers were not producing.
For us, it worked in industrial.
And here’s the one that made Gabe laugh. He said I was the first person, something like episode 650, to say this:
Wholesalers.
My move is simple. I tell wholesalers:
“Call me first. If I don’t want it, I’ll point you to three other people who will. You don’t have to do any extra work.”
That makes me their guy, and it keeps me in the path of their progress.
My 3 to 5 year outlook for Chicago: tight housing, tight industrial, and prices that stay under pressure
I’m bullish on both residential and industrial for the same reason: constraints.
In the Midwest, the headline is a tight housing shortage.
Industrial is expanding fast, and older industrial inventory is shrinking.
Retail has died in a lot of areas, and businesses that used to need foot traffic are moving into industrial space because it’s cheaper than main street retail.
We talked about examples you can literally drive past: breweries, vets, fitness, businesses that do not need walk in traffic anymore because marketing does the heavy lifting. They go to industrial.
On the residential side, Chicago zoning and building codes make it tough to build anything cheap.
The cheapest single family homes many builders can put up are 500 to 600 thousand, and they are not even building in big volume. They open small phases, it gets gobbled up, prices rise again.
Apartment developers are building at numbers that only work if rents stay high. A studio can be 2,200 to 2,300.
My class A single family rentals are more like 2,500 to 3,500.
If you are a Chicago landlord reading that and wondering if your rent is priced correctly, that’s the exact moment this tool is useful:
Not to squeeze anybody. Just to stop underpricing your own asset because you are guessing.
The deal that went sideways, and the one that was pure luck
Gabe asked about a deal that went sideways and the lesson.
The lesson was simple: don’t get lazy.
We were buying a ton of properties, and I was doing a tax sheriff sale buy. I drove down a one way street, the house looked beautiful, I didn’t look back, didn’t get out, bid the next day.
Went back after, and the entire roof was gone on the side I never checked.
We took it down to the studs, rebuilt, almost broke even, got broken into, and ultimately lost 30 grand.
The real loss was the nine months of opportunity cost.
Then he asked about a favorite deal.
One was pure luck. We bought an industrial building next to a golf course. A developer bought the golf course, needed egress for approvals, and they needed a street cut right where our building sat.
They bought our building for about three times what we paid.
We 1031 exchanged into another property and the rents doubled there too.
I also shared a story where we bought a portfolio, one building was vacant, it burned down, and because the lender required full insurance coverage, a property we paid 30 grand for resulted in 330,000 in insurance proceeds. Nobody got hurt.
Those lucky moments don’t mean you rely on luck. They just help you keep perspective when the gut punches show up.
The books I recommended, and the tool I’m using daily: AI
In the quick questions, I recommended:
James Clear… sorry, James Hardy in the moment. Specifically “Who Not How” and “2x Is Harder Than 10x”
“Pitch Anything” by Oren Klaff for negotiating
Then we talked about AI, because it’s here and it’s not going away.
I use it for everything: marketing, summarizing videos, reviewing legal docs.
On the property management side, the cool part is operational:
decision trees that auto approve certain work orders
taking what techs are doing in the field and auto generating invoices so we get paid
connecting steps that used to be manual
I’ve been messing around with Claude and cloud code even though I have no coding background, just testing what I can automate.
It’s only the beginning. Five years from now, who knows.
Final thought for Chicago landlords
If you want the short version of what I was trying to get across on the show, it’s this:
Chicago rewards operators.
Not hype. Not ego. Not guesswork.
If you lower your risk, tighten your screening, document everything, price correctly, and run clean move ins and move outs, you give yourself the best chance to build real wealth here.
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!
Founder, Partner, Podcast Co-Host, and Investor
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