Denver, CO vs Chicago, IL: Which Is the Better Investment?
Compare Denver (cap rate 5%) vs Chicago (cap rate 7.5%). Rent, appreciation, vacancy, and market health analysis.
Denver Price
$580K
Chicago Price
$335K
Denver Cap Rate
5%
Chicago Cap Rate
7.5%
Denver Rent
$2,400/mo
Chicago Rent
$2,100/mo
Denver Growth
1.5%
Chicago Growth
-0.3%
| Denver | Metric | Chicago |
|---|---|---|
| $580K | Median Price | $335K |
| $2,400/mo | Median Rent | $2,100/mo |
| 5% | Cap Rate | 7.5% |
| 2.8% | Appreciation | 3.1% |
| 6.1% | Vacancy | 5.2% |
| 715,522 | Population | 2,693,976 |
| 1.5% | Pop. Growth | -0.3% |
| 6/10 | School Rating | 5/10 |
AI Comparison Verdict
Denver, CO
Neutral
Chicago, IL
Good Investment
RecommendedDenver ($580K median, 5% cap rate) vs Chicago ($335K median, 7.5% cap rate). Denver offers higher rents with 1.5% population growth, while Chicago provides stronger yield with 3.1% appreciation. Chicago scores 63/100, outperforming Denver with stronger cash flow potential.
Summary
Denver ($580K median, 5% cap rate) vs Chicago ($335K median, 7.5% cap rate). Denver offers higher rents with 1.5% population growth, while Chicago provides stronger yield with 3.1% appreciation. Chicago scores 63/100, outperforming Denver with stronger cash flow potential.
Bull Case
- 1
Denver, CO: Strong population growth of +1.5% annually drives sustained rental demand and reduces vacancy risk, creating favorable conditions for landlords.
- 2
Chicago, IL: Diversified economic base with stable employment across multiple industries reduces single-sector dependency risk.
- 3
Denver, CO: 2.8% annual appreciation combined with principal paydown creates compelling total returns even with moderate cash flow.
- 4
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.
Bear Case
- 1
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.
- 2
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.
- 3
Denver, CO: Increasing new construction permits could add supply, pushing vacancy above the current 6.1% and pressuring rents downward.
- 4
Chicago, IL: Increasing new construction permits could add supply, pushing vacancy above the current 5.2% 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 (42) in certain neighborhoods may impact tenant quality, insurance costs, and property appreciation trajectory.
- !
Above-median crime index (62) 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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