CHICAGO—The market for multifamilyproperties on the city's North Side and in its affluent suburbs hasgotten so competitive that buyers have grown accustomed to very lowcap rates. But double-digit cap rates do exist in Chicago, andinvestors who feel priced out of the market just need to looksouth.

Although some properties in areas likeChicago's South Shore neighborhood can involve a higher degree ofrisk, including higher management fees, higher vacancy rates andmore maintenance expenses, a number of stabilized assets in SouthShore have recently traded with cap rates of 9 to 12%, and someeven higher, Kevin Rocio of ROC RealtyGroup, a division of @propertiesCommercial, tells

Rocio and his colleague ChikooPatel recently represented a private investor that boughta 28-unit apartment building at 7601 S. Yates Blvd. for $1.26million. The sales price represented a cap rate of 16.24%. Rociosays the building – which was 100% occupied at the time of the sale– had three years of strong financials as well as a laundry list ofcapital improvements over the past five years that significantlyimproved the property. The sale closed in June, and the buyer wasLLJ Holdings, LLC, a Homer Glen, IL-based firm,according to Cook County property records.

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Brian J. Rogal

Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.