Where to Invest?

43 Replies

Hello all

Im an investor in Chicago and have done pretty well over the last few years. I am thinking about selling and investing out of state but am just not sure where. The main reason for this is that taxes are way to high and my thought is that my  money would would work harder for me some where else, like TX. Any thoughts?

Hi Frank

I have helped a number of Chicago investors come to Ft Wayne.  I make introductions to my team and they take it from there.  (I have no profit interest when I make those connections.)

I like Ft Wayne because:

1.  Good price to rent ratios.

2.  low crime rates by national averages.

3.  Friendly landlord laws.

4.  Low property tax rates.

5.  Low insurance rates.

I would be happy to help if you want those introductions.

Chris

I was born and raised in Chicago and love it here but the taxes are just out of control. I hate to say it but Chicago could be the next Detroit!! That scares me. Besides I have made between 60% and 80% returns on my investments over the past 4 years so why wouldn't I sell???

I figure I could start investing somewhere that I might consider retiring to one day. I would prefer a warmer climate so Fort Wayne would be out, But thanks Chris L.

@Jerry W.  Thank you.

@Frank Gigliotti  Understood.  Something to think about though.  With the right team, it does not matter where you live.  Although I live in Ft Wayne, I have not walked through any of the past 100+ homes that I have purchased.  There are a number of successful Landlords here at BP that have helped other members invest in their area of expertise.

Best wishes on your decision.  One of the things that I have learned the hard way is to not get greedy and know when to lock in your profits.

@Frank Gigliotti . I think you are right about Chicago going the way of Detroit. Detroit was the blueprint for other major cities to file for bankruptcy. 

I think you should invest in the area that makes the most since to you.

As @Chris L. stated you don't have to where you buy as long as you have a great team in place.

I Like St Louis but i live here. 

I agree with @Frank Gigliotti. "I think you should invest in the area that makes the most sense to you." I would put something to paper and see what you want to accomplish and see where you can accomplish it. 

Peter MacKercher, Real Estate Agent in MO (#2010004223)
(314) 210-4414

Hi @Frank Gigliotti, I don't think you have all the facts about Chicago, if you think it's going the same way as Detroit.

Chicago is the 6th wealthiest city in the World (some years it came as 5th), and I am not talking about City Hall's money, I am talking about all the large companies that have their headquarters in Chicago. That's a lot of power and money invested here. Your money is safe.

What I would do if I were you, I would refinance my properties to get some of the cash out, while still have them cash flow nicely, and use that money to purchase properties in the areas where you want to diversify!

Also, just fight the property taxes every year, we all do!

Lumi Ispas, Real Estate Agent in IL (#475.113981)
773-392-2906

I agree with Lumi - I keep my money here.  I could retire today by selling my Chicago properties and putting that money into high cash flow markets, but I won't. 

If you think our taxes are bad, Texas is worse.  

Brie Schmidt, Real Estate Agent in Wisconsin (#57846-90) and Illinois (#471.018287)

@Lumi Ispas  Right on both counts.  Refi to get your money into play...not buried alive in the property, and keep challenging those property taxes.  Every decrease = increase in CF

@Frank Gigliotti  Texas is not the place to go to save on property taxes... In Chicago, I see taxes that are about 1/12th of gross, or 8.3%... I know that many suburbs are nearly 2x the taxes... What are you experiencing in tax burden?

@Lumi Ispas  Have you been successful in fighting RE taxes?  I let the marketing attorneys appeal taxes for free (I pay half of 1st year savings if successful), but they are only at about 10-20% success rate recently, and have not won any of the second level appeals.

@Dooreuhn Cee  The guy in Michigan I use wrote the book (actually, he did) on tax appeals.  I learnt a lot from him.  He's probably 50% successful at the city/twp level, and higher at the Tribunal.  

First rule:  Always prepare your presentation based on the Tribunal...not the city/twp.  You can't present anything new at the Tribunal, only what you presented at the 1st level, so make sure you have in your presentation what the Tribunal wants to see.

What they want to see, because they only rule on if the lower was correct in their ruling, is justification for your numbers...comps, and more comps.

Originally posted by @Joe Villeneuve :

@Lumi Ispas  Right on both counts.  Refi to get your money into play...not buried alive in the property, and keep challenging those property taxes.  Every decrease = increase in CF

 And why Joe?  Because, "equity is where your money goes to die".

This is one of your best Joe'isms.

I'm not sure why anyone would think that refi is the answer to capturing gains. Maybe I'm wrong but the way I see it why wouldn't you just sell?
I realize there are cost involved with selling but many of those are controllable to a certain extent (1039 or negotiating a lower commission with the realtor or even selling by owner) fortunately I do have a RE license but any way. Once u refi u are still carting the risk of the losing value even though it's only on paper and there are cost involved as well.

Please am I missing something!

Looking forward to Joe's response on that one. 

Yes you're missing something.  Cash Flow.  Once you sell the house it doesn't cash flow anymore...or at least for you.  When you refinance it does...and you get the cash out of it to buy another cash flow house, and keep doing it...

Originally posted by @Frank Gigliotti :

Hello all

Im an investor in Chicago and have done pretty well over the last few years. I am thinking about selling and investing out of state but am just not sure where. The main reason for this is that taxes are way to high and my thought is that my  money would would work harder for me some where else, like TX. Any thoughts?

 Frank, we buy-and-sell houses in Chicago AND we buy-and-hold in FT MYERS, FLORIDA. Why?

1) You are right on the money - property taxes are out of control in Chicago. Ft Myers - the taxes are reasonable. A $200K house in an A area will have $2,400 to $3,000 in RE taxes whereas in Chicago, that will be in the $7,000 to $10,000 range.

2) Florida is a retirement state and that's where the baby boomers are moving (in addition to Texas and other warmer states). FL's population is projected to grow so much so that it will surpass NY as the third largest state.

3) Within FL where do the retirees move? To Southwest FL like Ft Myers. Retirees are good tenants - they pay ahead of time :-) and they generally take care of your property

4) yes - your money will work harder too. We have rental properties in Chicago as well but the returns we get from our Ft Myers properties are way higher.

Having said all the above - these are GENERALIZATIONS and will not work everytime on every deal. After investing in real estate since 2003, I know I can buy an awesome cashflow deal in Chicago even with the taxes and buy a crappy deal in Ft Myers even with the advantages above. So, it's deal dependent as well.

@Dooreuhn Cee  , I fight them myself. I just give them good camps. In the past when I used an attorney, I paid 1/3 of the decrease as a fee. I stop using attorneys to fight my taxes after speaking to a tax attorney at a party and she shared that sometimes she is embarrassed to take people's money, as she does't do anything else different than the owner.

I will use an attorney only if I don't have time to do it myself. Thanks

Lumi Ispas, Real Estate Agent in IL (#475.113981)
773-392-2906

property taxes are very high in Texas also. They are around .03% of the properties appraised value. Look into the St Louis and Kansas city markets. Look into the Atlanta GA or indy areas.

Gordon Cuffe, Lender in CA (#1037464)
916-261-2381

Check states with no income tax. The reason why I say these states, they have great job growth and that relates and impacts housing.

Have you considered Kansas City? I manage properties here and have had a few clients from Chicago and nationwide who have been very successful in our market. We have a strong and diverse rental market, and there is actually a lot of growth and bigger corporations moving in. Our taxes are very reasonable as well. 

@Frank Gigliotti  

  if you have done well in your state you can do well anywhere.. its really a life style choice.

there is a reason that 1/4 of the nations population lives in 5 states on the west coast.

LIfestyle  then there is lifestyle and of course the lifestyle... throw in weather. natural beauty etc etc.. there was another thread about getting out of Real estate and the one who created the thread lives in Lima Ohio  where the heck is that?  And I ***** because I am in Oregon.. all things considered California is the place to be.. not for tax's or polictics but for lifestyle  year round.. yes Florida and the south is nice 6 to 7 months then you have Oppressive heat and humidity.. CA has non of that.. check it out.

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