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Author: Mark Ainely | Partner GC Realty & Development & Co-Host Straight Up Chicago Investor Podcast
Chicago investors keep asking the same question: should I buy right now, or should I wait?
Tom and I broke this down because the market feels confusing. Prices are up, inventory is tight, rates are still not where buyers want them, and a lot of people are trying to figure out whether they should jump in or stay on the sidelines.
The answer depends on who you are.
If you are a house hacker with a long-term mindset, the opportunity is still there. If you are trying to buy, live there for a year, and sell quickly, this market can hurt you. If you are a pure investor, the deals are still out there, but you need to be more strategic, more realistic, and more honest about risk.
What we talked about in this episode
The Chicago 2 to 4-unit market is still moving up
Tom started with data from Jason Wagner’s Wagner Report, and the numbers explain why buyers are feeling the pressure.
In the Chicago 2 to 4-unit space, prices were up almost 9% year over year in May. That was also the 30th consecutive month of positive growth.
That does not mean prices can never go down. Rates can change. The economy can shift. Something unexpected can happen. But right now, the fundamentals are still being driven by supply and demand.
There are not enough good 2 to 4-unit buildings for the number of buyers looking.
Across Chicago, the months of supply for 2 to 4-unit buildings is a little over three months. That is still a seller’s market. In hotter neighborhoods like North Center or Lincoln Square, it can be closer to one or one and a half months of supply.
That means good buildings are not sitting around.
Waiting probably means paying more later
My take was simple: I think prices are more likely to be higher next year than lower.
The inventory problem is not going away quickly. Builders are not adding a ton of new 2 to 4-unit buildings. Owners with 2.5% or 3% interest rates are not rushing to sell. And buyers are getting more creative with assumable loans, VA loans, off-market deals, and neighborhood-specific strategies.
So if someone is sitting around waiting for a big price drop, they may be waiting a long time.
That does not mean you should buy anything. It means you need to understand that waiting has a cost too.
House hackers still have an advantage
House hackers still have one of the best paths into Chicago real estate because they can use lower down payment financing.
If you can buy a 2 to 4-unit building with 5% down, that gives you leverage most pure investors do not have. You can control a large asset with less cash out of pocket, live in one unit, and let the other units help carry the property.
But that advantage only works if you have the right mindset.
You need to think long term. You need reserves. You need to understand that the property may not cash flow heavily on day one. And you need to be ready for repairs.
This is not a one-year play.
Who should not house hack right now
The person who should not buy right now is the person treating house hacking like a quick flip.
If you think you may move in a year or two and sell the building, this market may not be for you. Transaction costs, repairs, vacancy, and market timing can eat you up.
The other person who should be careful is the buyer going in too thin.
If you have no reserves and you are banking on refinancing in a year or two, you are taking on a lot of risk. If the roof, boiler, hot water tanks, or masonry hit you in the first 12 months, you can get hurt fast.
A good building in a good location will usually perform over time. But you have to survive long enough to let it work.
Do not confuse today’s market with 2008
Tom and I talked about why this market is different from 2008.
Back then, there was irresponsible lending everywhere. Negative amortization loans, adjustable-rate products, pick-your-payment programs, and loans that should never have been made.
Today’s lending environment is much more responsible. It is not perfect, and defaults can still rise, but we are not seeing the same level of reckless lending that helped create the last crash.
Rents are also much more stable today. Going into 2008, everyone was buying and the rental market was not as strong. Today, rents are stable and still have room to grow in many areas.
That is a major difference.
Pure investors need to level set expectations
For pure investors, the market is harder.
I still believe in value-add deals, but not every investor should start with a heavy rehab. If it is your first project, you may not need the perfect BRRRR where you get every dollar back.
Sometimes the right move is to buy a solid deal, leave some money in, learn the process, and build from there.
Too many investors are waiting for a deal that gives them 100% of their money back. But if that causes them to buy nothing for a year, they may actually be falling behind.
In a tight inventory market, you may need to adjust the play.
BRRRR still works, but it may look different
The point of BRRRR is to create equity and recycle capital.
But in this market, you may need to leave 10% in the deal instead of getting every dollar back. That is not failure if you created equity and bought a good asset.
If you buy nothing because you are waiting for the perfect deal, you did not preserve capital. You missed a year of ownership, rent growth, debt paydown, and appreciation.
You have to ask where you want to be in five or ten years, not just whether this one deal returns every dollar immediately.
There are still ways to create value
Good investors are still finding ways to make deals work.
That might mean:
Buying off market
Solving violations
Changing zoning
Adding bathrooms
Adding bedrooms
Improving layouts
Taking on lighter value-add projects
Buying properties other investors are afraid to touch
Not every deal needs to be a monster rehab. Some value-add opportunities can be handled with less than $100,000 of work if you know what you are looking at.
The key is knowing which risks you can actually handle.
Do not buy someone else’s deferred maintenance problem
This is where house hackers and new investors need to be careful.
Because inventory is tight, sellers can get away with selling bad properties at stronger prices. That means buyers need to be very honest during inspections.
I have seen house hackers get excited about a property, then realize it had $70,000 or $75,000 in deferred maintenance that could hit in the first year.
Old hot water tanks, a tired boiler, a roof with early signs of failure, masonry issues, parapet walls, and neglected systems can add up fast.
If you ignore the problem during inspection, it does not disappear. You still have to deal with it later.
The worst outcome is buying the wrong property and quitting
The biggest risk is not just losing money on one deal.
The bigger risk is buying a bad property, getting overwhelmed, and leaving the game completely.
That is why your team matters. A good broker, inspector, contractor, lender, and property manager can help you avoid buying a dog property that kills your confidence.
Chicago still has opportunity. But you need to buy with your eyes open.
Questions We Answer in This Episode
Q: Should house hackers buy in Chicago right now?
A: Yes, if they have a long-term mindset, reserves, and are buying a property that can perform over time. No, if they are treating it like a short-term flip.
Q: Are Chicago 2 to 4-unit prices likely to drop soon?
A: We do not see a major drop as the most likely outcome right now because supply is still tight and demand is still strong.
Q: What is the biggest risk for new house hackers?
A: Going in too thin, with no reserves, and buying a property with major deferred maintenance they are not prepared to handle.
Q: Does BRRRR still work in Chicago?
A: Yes, but investors may need to leave some money in the deal instead of expecting to pull out 100% of their capital every time.
Q: What should buyers watch for during inspection?
A: Roofs, boilers, water heaters, masonry, parapet walls, and any deferred maintenance that could become a major expense in the first 12 months.
Show Notes and Timestamps
00:15 Why investors keep asking if they should buy right now
00:54 Chicago 2 to 4-unit market data and why fundamentals matter
01:24 Prices up almost 9% year over year in May
01:57 Months of supply and why Chicago is still a seller’s market
03:07 Why inventory problems are not going away quickly
04:03 House hackers and the advantage of low down payment financing
06:18 Where house hackers can get burned
07:39 Why today’s market is different from 2008
08:53 Value-add investing and adjusting BRRRR expectations
10:38 Deferred maintenance risk and why inspections matter
Key Takeaways for Chicago Investors
Chicago 2 to 4-unit prices are still rising because demand is stronger than supply.
Waiting for a major price drop may mean paying more later.
House hacking still works, but only with a long-term mindset.
Buyers with no reserves should be very careful.
Today’s market is different from 2008 because lending is more responsible and rents are more stable.
Pure investors may need to accept leaving some money in a deal.
BRRRR is still viable, but the perfect “all money out” deal is harder to find.
Deferred maintenance can destroy a deal if you ignore it during inspection.
The goal is not just to buy, it is to buy something you can survive and keep.
Because finding good tenants and property management shouldn’t feel like online dating.
Dear Investor,
If you are an investor in either the city or suburbs of Chicago, I would love to speak with you about how we can help you on your real estate journey. At GC Realty & Development LLC, we help hundreds of Chicagoland real estate owners and brokers each year manage their assets with both full service property management and tenant placement services.
We understand that every investor’s goals are unique, and we love learning about each client’s individual needs. If there is an opportunity to help you buy back your time by managing your rental property or finding quality tenants, please check us out.
Best Investing,
Founder, Partner, Podcast Co-Host, and Investor
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