@Dave Cieslicki a lot of BP folks are down on Illinois, and I am sure you will get a bunch of responses about all the negatives. I live and invest in the near southwest suburbs of Chicago (Berwyn, Oak Park, Brookfield). Not only is this a very nice area to live, but this area is a very strong rental market with a mix between cash flow and appreciation. Many areas of the Midwest are totally flat when it comes to appreciation, so it is nice to get the lower "Midwest" purchase prices, but still see healthy appreciation.
At the end of the day, I stress test each property I buy to make sure I can handle a tax hike, etc. So far, I have been very profitable with my Illinois properties.
I agree with @John Warren , a lot of negativity regarding Illinois, and Chicago in particular. I have been investing in Chicago and plan on doing so for the long haul. Every area has it's particular pluses/minuses and challenges but if you find the right deal at the right price, it'll work out. I feel it also depends on what kind of investing you want to do. SF rentals I think are really tough in Illinois. 2flats/3flats/6 unit buildings I think are great long term investments but hard to find right now. Flipping houses is still going strong but also inventory is real low. My biggest problem with Chicago and the surrounding areas isn't whether to invest or not. It's that inventory is so low that it's real hard to find good deals and when one does come out, you have tons of competition fighting over it.
My first thought with IL, is high taxes, and that you can't change. If it's your locality, you gotta work with what you got!
I often think of the Warren Buffet quote, where they say "Be brave when others are fearful, and fearful when others are brave"
I aggressively invest in an area that's got a horrible reputation for being poorly managed. When I tell others that's where I buy, most often a get the "are you crazy?" look because of all the bad press, and no one wants to go down there. You know what... historically it's been a crapshoot, always hearing of budget problems, the worst was when they had to do a gofundme for new fire equipment.. but it's scared off other investors so the deals we have gotten are insane. Just this year, the city posted a $7M-- yes million, surplus!
So IMO, the best time to buy, is when the average investor is saying no, because of the unknowns--- as long as you believe in the area, and you know the logistics as to why it's a strong long term bet. It boils down to 1 thing IMO-- Location! Does it have steady employers? Steady growth? I will say, bad reputations IMO only really work for buy/holds, not flipping-- no one wants to pay top dollar for an area they hear is bad, but they will rent there because they need the location!
We invest in Southern Illinois. The problem is that the politicians are the problem. Eventually the state will get back on track and start enticing businesses to come to Illinois not flee. Good Quality residential properties are not on the market for long. We have a shortage of inventory. There are bargains to be had. Can you ride the curve until we start coming back up?
Thanks for your input on this I appreciate the feedback and insights! I’ve lived in Illinois my whole life and my family is all here so Im torn on staying and investing or going somewhere else. Im an licensed electrical contractor by trade but would like to set my focus on investing. Its scary to see houses selling for less than they did 15 years ago.. I just wanted to make sure I wasn’t the last guy still looking in this area haha.
Taxes are high and going up, water and sewer costs are going up every year but so are rents. In my investment area, Northern Illinois and particularly Chicago and Northwest suburbs, over the last 6 years rents have gone up by 20% while taxes and other fees have gone up by about 10%. What does that mean for the long run? Hard to tell. But the value of the properties in my area have also gone up by about 20% over the last 5 years so I see more benefits then negatives overall.
@Dave Cieslicki , Everything close to Downtown Chicago and North Side around the train lines is heaven to invest. Pricing grows at a much faster rate than the rest of the city and/or the suburbs.
Focus on buying where the money is! While Chicago does not have the highest rate of in-state moving, it is the number one area at high-income movers!
I only invest in IL and in the Chicago west suburbs because that is where I've lived and raised my children. I like to invest where I can get to a rental property in less than an hour even during rush hour. I handle renting, managagment, and 90% of repairs, close is better. My most profitable rental is in an area that is looked down upon by many well off suburbanites and a fair number of real estate agents, sometimes it is easier to find values where less people are looking for them.
I own a few single family houses as well as a couple of 4 plexes throughout Illinois. West suburbs of Chicago as well as northern illinois and I guess what you would consider south/central Illinois within about an hour or so of the Chicago west suburbs. I figured as long as the property is within an hour drive of me I can manage the properties myself, which I do. Returns can vary from ok to great depending on where in Illinois you invest. Taxes are higher compared to the neighboring states of Wisconsin and Indiana and Illinois has more tenant friendly laws than those other two states, but I feel like you get a bigger renters pool as well as some decent appreciation depending on which suburb you invest in. Some areas have appreciated significantly, other areas have seen some appreciation but I would consider them more of a cash flow play. I intend to keep acquiring properties in Illinois but I am thinking of investing in Indiana at some point as well, to take advantage of the lower taxes and lower price points. But I feel that you can definitely still find some great deals in Illinois for both appreciation and cash flow.
lol it’s funny....it seems as if a thread like this pops up almost every other week. Illinois will be fine. Overall the Midwest is a great area to invest in. Me personally I focus on Chicago(south, west and north sides along with their suburbs) and northwest Indiana which is basically an extension of the south suburbs of Chicago. It really depends what type of return your looking for. If you want 20% ken higher as a flip then there are certain areas you can’t fix and flip in because the area isn’t for flipping because of various reasons such as the purchasing price and the comps that’s go in that area.
If you want nice cash flowing areas I personally wouldn't recommend anyone to look for cash for up north. Not saying it's not possible but just rare. I seen 5-7% CCR which If that's ok with you then there are several of those that you can find. But you could go to a decent area on the south and west side and get a property to cash flow at 12-15% CCR.
So as others have mention. There is still a ton of opportunity here in Chicago and other places in Illinois at well. Don't sleep on Northwest Indiana by the way. There aren't as many available properties there because they are gone so fast because of the much lower taxes and laws that favor landlords. Not to mention high cash flow. I came across several properties which had 14-17% CCR!!!! All one would need is a good property manager to place a good tenant in. I know some good ones for Chicago and Indiana.
Chicago and the surrounding area is growing and will continue to grow.
We have the infrastructure, we have the big companies relocating here, the city is world class and our cost per sq foot is still way less than second tier metro markets
Have thought about IN, and down state IL. I like the potential liquidity better in the Chicago area market.
@Dave Cieslicki , what areas of IL are you talking about. Being near Elburn you have two universities pretty close by. Are you wanting to stay out in the further west area? Cook county can be a dream, it can also have some pretty crummy nightmares. I was listen to the BP podcast the other day, and it came up to invest where you want to live. Even if you pay more, you are where you want to be. I dig that. My end game is mountain towns so I am studying those markets.
My rentals are between 12-18% cash on cash returns (with 20% down and conventional financing). And I only invest in the suburbs.
Like anything, you just need to know your market. The taxes suck here, but certainly within a reasonable drive you can find properties that'll work.
Well lately the market by me (far west suburbs of Chicago) seems pretty lack luster but Im hoping a new wave will come through. I get anxious when I feel like Im wasting time or missing opportunities. I had pretty good luck a couple years ago and lately opportunities just seem average but maybe Im just looking for too good of a deal and should focus on quantity. Anyone think Illinois will ever reduce taxes.. maybe to entice a reversal of the exodus and bring in more tax payers?
As soon as Mike Madigan: retires, get's removed from office or deported to the eternal nether regions of fire - Illinois will make a come back. We need good candidates for office who are not part of the political machine of either party.
If Libertarian candidates start sweeping elections it can happen "Before" Mike Madigan assumes room temperature.
I am not saying Mike Madigan is the only thing wrong in Illinois, but he sure is the poster boy. How can you serve as an elected politician who raises real estate taxes, AND own part of a law firm that makes its bread and butter appealing real estate taxes?
Too bad Mad Dog Mattis is not a resident of Madigan's district. Things would be different.
Whenever the gov is involved in anything.....it becomes inefficient and more taxes and rules are put in place to benefit them.....They are a business entity to.....
There's deals everywhere, you just have to learn the market and find your niche.