Mayor's Plan for Chicago

10 Replies

We just had one of our investor partners send us this article.  Not sure she realized that by today's standard this article from March 2013 is  old news but I thought it would be interesting to see what those of you investing in Chicago think about the Mayor's plans. How has the city done since this article was written?  Have you modified any of your investment strategies based on the city plan.  The areas include:  Bronzeville, the Eisenhower Corridor, Little Village, Pullman, Uptown and Rogers Park.

Chicago Sun Times Mayor's Strategic Vision

@Crystal Smith  

I grew up in Evanston, Illinois. If I was currently investing in Chicago, I would be in Roger's Park, no question. In part, this is because I know the area well. Also, because I think it's one of the most under-valued urban neighborhoods in the country. It's a great community, very safe, and convenient for several universities.

We should talk more. I'd be interested in hearing what you're doing in Chicago. 

What I would say is that I would be very careful what investing strategies I used in the City and even in this state. There are some huge financial holes in this state's and city's budget that there is only one way they will be able to address and thats through significantly raising taxes. 

At some point, property taxes, which are already the highest in the country are going to have to go up again. Now maybe flipping in those areas might make some sense. But I would not buy and hold anything in the city of chicago knowing that the gap exists.

Its simply a state run amok by politics that has been writing checks they simply cannot cash. The pensions in this state are so riduculously generous and were created as political favors to keep the unions voting, its put this state in a huge bind.

And property tax rates in Illinois are triple or quadruple in some cases those in neighboring states like indiana - who have the same exact services as we do here.

Democrats run wild!  would make for the perfect as-seen-on-tv name for the video of how messed up this state is.  That being said, I'm not fond of either party to be honest. I think it just so happened that the democrats have been running this state legislature for years so they were the ones in control and, therefore, deserve the blame.

If you've read any of the tribune articles on pension rules here and all the scams these govt/political employees run that allow them to boost their pensions, its sad.....

@Mike H.  Thanks for your feedback.  I see you live in Manteno.  Is your portfolio in Illinois?  

The property tax issue you've bought up is interesting. Many of the deals we've killed lately, because of taxes, were in the Cook County suburbs, not in the city itself. We're looking @ a deal now, seller wants $99K; ARV supports ~$250K; Property taxes are $13K. We're going to send someone to take a look so we have an idea about the potential renovation costs. But let's say it's $50K. The area will support rent of ~$1500 per month. On the surface it looks like a great deal. Do you buy and hold, flip or pass? The average DOM for the sold comparables is >90 days.

If you're a Bears fan would  you agree to a tax increase to change Soldier Field from grass to turf?

Yep. My portfolio is entirely in Illinois (32 with #33 under contract as of yesterday). Strictly buy and hold for me. And strictly down here by me where the landlord laws are at least reasonable.   

I bought a couple in southern cook county when I first started and I will be dumping those eventually. But they cash flow pretty well and I do have some equity in them so at least I won't take a bath to get out of them.

And thats just it if you're looking to flip or buy and hold in those areas. Do you want a house that you're paying 1k a month for taxes and the rents are only 1,500? Thats not going to work no matter what "rule of thumb" you use. :-)

And flipping is a bit risky too. Gonna be that much harder for someone to qualify for a loan when the taxes are 13k.  So your buyer pool is that much further reduced.

As for the turf at soldier field, that seems to be the least of our worries these days. We've got the highest paid qb in the league with 4 pro bowl weapons (at one time or another) in marshall, jeffery, bennett and forte and he still can't score......

And the defense gives up 50 points in what looks like a game of madden football where nobody tackles anybody.

New GM is on board. I'm guessing Bowles as the coach so they go back to defense? The only way I'm paying higher taxes for anything related to the bears is if my tax money would go toward bringing in a replacement qb like drew brees. :-)


@Trevor Ewen  I see you live in Long Island City.  We took 2 trips to NYC this summer. Spent some time in Manhattan & Brooklyn.  Didn't make it to Queens. 

Regarding Rogers Park.  An interesting area, with Loyola University near by.  Do you think a priority will be put on developing Roger's Park versus the other 6 areas?

"democrats have been running this state legislature for years so they were the ones in control and, therefore, deserve the blame."

Mike H, property tax rates are set by local jurisdictions. The last time I checked, there are plenty of republicans running the show in downstate Illinois.

@Crystal Smith  

It's only because I know it, well.

People often make the mistake of anonymizing everything they do. But everything is local, everything can be personal. I actually think a tremendous edge that we all have is our personal network and experience(s). That's the thing that can make a bad deal good, and make a good deal even better for someone else.

In Roger's Park, I would have no problem with property management, contracting, or evaluating neighborhoods. Those are bigger hurdles to jump over in the south side or another region (where my pm would not be able to travel). As a result, even if fundamentals are better in other areas, I choose the devil I know over the alternative.

@Mike H.  You pass the test on the Real Estate question- The answer is Pass on the deal, but we're sending someone out to look @ the property because of a client that specifically wants to live in that area even w/ the taxes.  

Regarding the Bad News Bears.  We live in walking distance of Soldier Field & vote no tax $ for turf.  Fix the pot holes 1st.  Just trying to have some fun here.

Originally posted by @Crystal Smith :

@Mike H.  Thanks for your feedback.  I see you live in Manteno.  Is your portfolio in Illinois?  

The property tax issue you've bought up is interesting. Many of the deals we've killed lately, because of taxes, were in the Cook County suburbs, not in the city itself. We're looking @ a deal now, seller wants $99K; ARV supports ~$250K; Property taxes are $13K. We're going to send someone to take a look so we have an idea about the potential renovation costs. But let's say it's $50K. The area will support rent of ~$1500 per month. On the surface it looks like a great deal. Do you buy and hold, flip or pass? The average DOM for the sold comparables is >90 days.

If you're a Bears fan would  you agree to a tax increase to change Soldier Field from grass to turf?

 Which suburbs have those high tax deals been in? I would love to stay far away from these areas if possible.

As for the bears. I think a 2 billion dollar franchise should be able to afford turf but we know our cheap owners will ask for city tax dollars to fund it. They need to buy the stadium from the Chicago park district. 

Are some suburban single family house owning landlords wanting to dump some properties off their portfolio as a result of this?

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