Chicago, IL vs Denver, CO: Which Is the Better Investment?
Compare Chicago (cap rate 7.5%) vs Denver (cap rate 5%). Rent, appreciation, vacancy, and market health analysis.
Chicago Price
$335K
Denver Price
$580K
Chicago Cap Rate
7.5%
Denver Cap Rate
5%
Chicago Rent
$2,100/mo
Denver Rent
$2,400/mo
Chicago Growth
-0.3%
Denver Growth
1.5%
| Chicago | Metric | Denver |
|---|---|---|
| $335K | Median Price | $580K |
| $2,100/mo | Median Rent | $2,400/mo |
| 7.5% | Cap Rate | 5% |
| 3.1% | Appreciation | 2.8% |
| 5.2% | Vacancy | 6.1% |
| 2,693,976 | Population | 715,522 |
| -0.3% | Pop. Growth | 1.5% |
| 5/10 | School Rating | 6/10 |
AI Comparison Verdict
Chicago, IL
Good Investment
RecommendedDenver, CO
Neutral
Chicago ($335K median, 7.5% cap rate) vs Denver ($580K median, 5% cap rate). Chicago offers lower entry costs with -0.3% population growth, while Denver provides higher appreciation with 2.8% appreciation. Chicago scores 63/100, outperforming Denver with stronger cash flow potential.
Summary
Chicago ($335K median, 7.5% cap rate) vs Denver ($580K median, 5% cap rate). Chicago offers lower entry costs with -0.3% population growth, while Denver provides higher appreciation with 2.8% appreciation. Chicago scores 63/100, outperforming Denver with stronger cash flow potential.
Bull Case
- 1
Chicago, IL: Diversified economic base with stable employment across multiple industries reduces single-sector dependency risk.
- 2
Denver, CO: Strong population growth of +1.5% annually drives sustained rental demand and reduces vacancy risk, creating favorable conditions for landlords.
- 3
Chicago, IL: Above-average cap rate of 7.5% generates strong cash flow from day one, providing a buffer against expense increases and vacancy periods.
- 4
Denver, CO: 2.8% annual appreciation combined with principal paydown creates compelling total returns even with moderate cash flow.
Bear Case
- 1
Chicago, IL: Rising interest rates increase carrying costs — a 1% rate increase on a $268K loan adds ~$223/month to mortgage payments, compressing cash flow.
- 2
Denver, CO: Rising interest rates increase carrying costs — a 1% rate increase on a $464K loan adds ~$387/month to mortgage payments, compressing cash flow.
- 3
Chicago, IL: Increasing new construction permits could add supply, pushing vacancy above the current 5.2% and pressuring rents downward.
- 4
Denver, CO: Increasing new construction permits could add supply, pushing vacancy above the current 6.1% and pressuring rents downward.
Key Risks
- !
Interest rate risk: refinancing in a higher-rate environment could eliminate positive cash flow on leveraged properties, requiring additional capital reserves.
- !
Interest rate risk: refinancing in a higher-rate environment could eliminate positive cash flow on leveraged properties, requiring additional capital reserves.
- !
Above-median crime index (62) in certain neighborhoods may impact tenant quality, insurance costs, and property appreciation trajectory.
- !
Above-median crime index (42) in certain neighborhoods may impact tenant quality, insurance costs, and property appreciation trajectory.
Final Verdict
Chicago, IL edges ahead in our analysis. Chicago scores 63/100, outperforming Denver with stronger cash flow potential. Ultimately, the best choice depends on your investment timeline, risk tolerance, and portfolio allocation.
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