773property Logo


Chicago Cap Rates

H ello to all my website visitors out there! At the end of this post, you will find a heat map of Chicago Cap Rates by neighborhood. Map areas with a darker shade of blue have higher cap rates. If a map area has a lighter shade of blue, it means the cap rate is lower in that area. If an area has no shade at all, it means there were no multi-family sales for the time period.

This analysis covers the 2 year period ending on August 14, 2021. The cap rates are based on sales of multi-family properties (5+ units). This sales data was taken from the Multiple Listing system.

What is the average cap rate in Chicago?

For the 2 year period ending on August 14 2021, the median cap rate in Chicago was about 6.18%.



What is a Cap Rate?

Well, I am glad you asked. Here is a refresher on the concept of Cap Rates. According to Investopedia:
"The capitalization rate, often referred to as the cap rate, is a fundamental concept used in the world of commercial real estate. It is the rate of return on a real estate investment property based on the income that the property is expected to generate. This metric is used to estimate the investor's potential return on his or her investment. The capitalization rate of an investment can be calculated by dividing the property's net operating income (NOI) by the current market value or acquisition cost of a property - expressed in the following formula:
Cap Rate = Net Operating Income / Current Market Value "


Chicago Cap Rate Analysis

Please keep in mind 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. Some people cleverly refer to this as the 50% rule :) 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 spent a lot of time putting this heat map together, so hopefully you find this information useful!

If you would like more information on buying or selling investment properties in the Chicagoland area, please send me a message.



Chicago Cap Rate Heat Map

Chicago Cap Rate Heat Map for 2021

Area Neighborhood Cap Rate
1 ROGERS PARK 4.71%
2 WEST RIDGE 4.69%
3 UPTOWN 4.41%
4 LINCOLN SQUARE 4.31%
5 NORTH CENTER 5.74%
6 LAKE VIEW 3.96%
7 LINCOLN PARK 4.45%
8 NEAR NORTH SIDE 4.17%
9 EDISON PARK 4.54%
10 NORWOOD PARK 4.67%
11 JEFFERSON PARK 4.52%
13 NORTH PARK 4.64%
14 ALBANY PARK 3.95%
15 PORTAGE PARK 4.96%
16 IRVING PARK 4.08%
17 DUNNING 4.3%
18 MONTCLARE 4.9%
19 BELMONT CRAGIN 4.85%
20 HERMOSA 5.41%
21 AVONDALE 4.57%
22 LOGAN SQUARE 4.46%
23 HUMBOLDT PARK 5.11%
24 WEST TOWN 4.24%
25 AUSTIN 8.54%
26 WEST GARFIELD PARK 11.95%
27 EAST GARFIELD PARK 5.12%
28 NEAR WEST SIDE 4%
29 NORTH LAWNDALE 9.02%
30 SOUTH LAWNDALE 6.28%
31 LOWER WEST SIDE 4.11%
38 GRAND BOULEVARD 7.68%
39 KENWOOD 6.36%
40 WASHINGTON PARK 7.05%
42 WOODLAWN 7%
43 SOUTH SHORE 8.68%
44 CHATHAM 9.79%
46 SOUTH CHICAGO 8.98%
48 CALUMET HEIGHTS 9.2%
49 ROSELAND 10.93%
52 EAST SIDE 7.01%
53 WEST PULLMAN 13.93%
56 GARFIELD RIDGE 7.13%
57 ARCHER HEIGHTS 5.59%
58 BRIGHTON PARK 9.18%
60 BRIDGEPORT 3.68%
61 NEW CITY 8.26%
63 GAGE PARK 7.97%
64 CLEARING 5.74%
66 CHICAGO LAWN 10.25%
67 WEST ENGLEWOOD 9.42%
68 ENGLEWOOD 11.01%
69 GREATER GRAND CROSSING 10.73%
71 AUBURN GRESHAM 10.49%
73 WASHINGTON HEIGHTS 7.77%
76 O’HARE 5.13%
77 EDGEWATER 3.86%