Chicago Flats: Beginner's Guide to Property Investment (Part 1)
Updated: Oct 7, 2020
Buying property in the next year? Consider a Chicago flat. Expanding your home search to multiple property types can offer more viable options.
The architecture and use of 2-4 unit buildings are deeply rooted in Chicago's history. Built between the 1890s-1920s, these Chicago flats tell a story of America’s melting pot after the Great Chicago Fire. Owning a Chicago flat was part of the American dream; largely built by and for use by Bohemian immigrants as well as for sale, these buildings were constructed in the classic styles and types of the times.¹
Common types and styles:
Types - Chicago Greystone, Chicago brick, workers cottage, two-flat frame
Styles - Italianate, Victorian, Dutch colonial, Prairie, Queen Anne
Although 2-4 unit flats are no longer being built, on average they make up 27% of Chicago’s housing inventory, varying from neighborhood to neighborhood.² More importantly, Chicago flats throughout the city are not often a property type considered by first-time homebuyers, nor those looking to buy a condo or single family home. While we all continue to spend more time in our private residences during the ongoing pandemic, low mortgage rates are predicted to continue into 2021. These alone are two reasons to consider purchasing a Chicago flat.
Affordability and Supplemental Income
Buying a larger building can be intimidating. You can’t look at purchasing a condo or single family home the same way as a Chicago flat. For one thing, the type of loans available to consumers for a condo or single-family home are not the same type needed for a Chicago flat. The loan options take into account rental income generated as it relates to the cost of the building.
A Chicago flat can provide future rental income. Owners can occupy a unit and rent out remaining ones to cover mortgage. The owner would need to take on landlord responsibilities or outsource parts of that responsibility.
As you might already know, 5+ unit properties share common spaces that need to be maintained with Homeowner’s Assessment (HOA) fees. For condo purchases, the HOA is factored into the expected monthly mortgage. In the city of Chicago this cost typically varies from $250 to over $1,000 for some high rises. You will not have to pay a monthly HOA fee If you purchase a Chicago flat.
If you need more living space, the Chicago flat is for you. Zoom virtual backgrounds are amusing, but when you get off your next call and back into your physical space, look around you. Do you really have the space you need for an office, or to just separate yourself from the pet dog barking or snoring during your calls?
Some flats include a commercial unit that you can rent or use for a business. These are harder to find among existing inventory, but they do exist. You can also convert a unit and make the necessary changes to meet business/commercial zoning and code requirements to start.
COVID-19 has left many of us craving more outdoor time and space, too. Envision yourself sipping a cup of coffee on your new front porch or having small, distanced gatherings in the backyard of your Chicago flat--that's a great start to curing our 2020-2021 ailments.
Are you socially distanced from your crew? Bring your friends or family closer to you. If you have people in your life who would be open to sharing their own space near you and can invest towards that dream with you, consider buying a Chicago flat together. You can discuss your investment options with a real estate attorney, in accordance with real estate laws where you live. If you are not married, an option for a joint property investment is tenancy in common.³
Keep In Mind
Purchasing a Chicago flat also brings additional responsibilities to realistically prepare for. Renovation is one. Some buildings will require more renovation than others. It is important to keep in mind what you need now and what you might need after the pandemic. Look to do little renovation for the next year. With the state of the world as it is, we are experiencing material shortages, as with lumber in the US.⁴ Make sure you can live in the building safely and with the aesthetic in the short-term while setting your remodeling expectations for the times. On the bright side, there is ample time to dream and plan!
You will also need to take on a property management role. In lieu of an HOA fee, we recommend that owners budget for maintenance and repairs, like you would for a single family home. We offer property management services that can assist with when and how to go about maintenance and repair, like flashing or replacing a roof, replacing a water line, or exterior tuckpointing or painting. The list goes on and varies depending on the age, condition, and upkeep the property has received over time. This is a determination that you can make as you assess and evaluate properties options prior to purchasing.
Chicago Flats on the Market (as of October 3, 2020):
Before scheduling to walkthrough properties in-person, you can start assessing them online.
The below listing images are from MRED MLS, as syndicated to property listing sites.
2726 N Mozart St - unique style 2-flat, and that yard 😍
2430 N Talman Ave - a spacious, classic Chicago brick 3-flat
3244 W Diversey Ave - 2-flat Greystone at $510,00
1717 W Henderson St - a converted style, likely once a brick single-family
home updated to a Victorian style 3-flat
3621 N Ravenswood Ave - 2-flat at $650K
1433 W Winona St - 3-unit Greystone
Old Irving Park
3913 N Kenneth Ave - Victorian style with a single-family home feel
6319 N Louise Ave - unique Georgian style, adjacent to the suburbs, near Metra
For your property needs, contact us at firstname.lastname@example.org.
1. “Two- and Three-Flats.” Chicago Architecture Center - CAC. Accessed October 2, 2020. http://www.architecture.org/learn/resources/buildings-of-chicago/building/two-and-three-flats/.
2. “Exploring 5 Common Types of Chicagoland Multi-Family Buildings.” bairdwarner.com, July 1, 2020. https://www.bairdwarner.com/2019/06/11/types-multi-family-buildings-chicagoland/.
3. “Buying a House with Someone.” Findlaw, February 26, 2020. https://realestate.findlaw.com/buying-a-home/buying-a-house-with-someone.html.
4. “NAHB Addresses Rising Lumber Prices, Builder Concerns.” Professional Builder. Accessed October 2, 2020. https://www.probuilder.com/nahb-addresses-rising-lumber-prices-builder-concerns.