By Matt Lachey, Editor

Record low interest rates, a stagnant stock market and an explosion of residential developments are leading many Chicagoans to invest in the real estate market. Whether these speculators are looking for an urban vacation home, a place to rent out or a quick profit, it is certain that investment real estate is as popular as ever.

While it’s impossible to track the amount of speculators in Chicago, Gail Lissner, vice-president at Appraisal Research Counselors in Chicago, believes that they comprise at least 25 percent of the market and the number could be much higher.

If you’re considering a real estate investment, specifically in a new construction property, expect to have some competition in finding the perfect fit. To ensure a successful investment, these are some factors to consider before making a purchase:

LOCATION AND LOCATION
The most clichéd yet accurate rule of real estate is to focus on the location. Selecting a property in the right neighborhood could make or break the bank.

Mike Golden, co-founder of @properties in Chicago, believes it is critical to closely examine the neighborhood when buying as an investment.

“Does it have growth potential?” Golden said. “You need to be cognizant of what’s happening in the location.”

Golden believes one error an investor can make is purchasing a property in an area that’s oversaturated with new developments.

“You don’t want to buy something that’s overvalued,” he said. “You have to think that if there is a lot that’s going to hit the market, there may also be a lot of competition to resell.”

Dubin Residential is one Chicago developer that specialized in neighborhoods building on the cusp of revitalization. Dubin’s Welbourn Row, located near the intersection of Damen, Diversey, and Clybourn, is a large part of the real estate renaissance that has occurred in West Lakeview.

David Dubin, president and CEO of Dubin, believes fringe areas are a sound real estate investment in Chicago.

“With all the high-rises going up in the Loop, the resale market is going to be really tough,” Dubin said. “If you buy in an area just off the beaten track, you have a great chance for appreciation.”

Dubin’s development at the far end of the South Loop will rest two blocks south of Cermak Road. Currently, the building craze in this area has not extended this far south, but Dubin sees tremendous potential.

“By the time residents move in the mid-year 2006, the area will be hopping with activity, which is great for lifestyle and investment,” Dubin said. “Plus, residents will be three blocks from the Lake and near public transportation, which is a huge benefit to resale value.”

STICK AROUND FOR THE LONG HAUL
The length of the investment desired by the buyer can strongly influence the selection process. According to Golden, as recently as six or seven years ago investors were looking to quickly sell or ‘flip’ properties into profit. He believes in recent months, the trend is shifting to longer-term investments.

“More investors are not looking to just make a quick buck and get out,” Golden said. “Many people are buying for more of a long-term investment.”

According to Louis D’Angelo, president of Metropolitan Properties and the developer of Metropolitan Tower on the Park, supply and demand is working in favor of investors purchasing on the south end of Michigan Avenue. Metropolitan Tower on the Park, a 30-story adaptive reuse at 310 South Michigan Avenue, is one of the numerous federally protected buildings along Millennium Park and Grant Park.

D’Angelo believes that these measures will make this area on South Michigan Avenue a wise choice for a long-term investment.

“I see the demand continuing and the supply is not going to be able to keep up with the demand,” D’Angelo said. “Most of these buildings are architecturally significant and the city had the foresight to protect them.”