How bad is Chicago / surrounding Cook co really?

Question

I've read some bad things... nothing but problems for LLs, stay away... Cook County known for cranking up taxes HARD after a sale, near impossible to evict, etc... Is it really bad enough that you'd suggest staying away? My grandmother lived in a 6-flat when I was a kid and they look like a perfect little building for a newbie, and there's so many of them... But the things I've read about IL and Cook Co. specifically have scared me away from really even looking.

Thanks

Mark

Thanks

Mark

Mike Fisher · Answer

Mark, you are not crazy. Cook County is not landlord friendly, and the friction is real. But “stay away” is too simplistic.Here’s the accurate way to look at it from someone actively operating here:

Taxes can spike after a saleAssume reassessment risk and underwrite with a higher tax number from day one. If the deal only works using the sellers low taxes, do not buy it. Appeal every year like it is part of operations. Evictions are slower than most markets

It is not impossible, but it is slower and more expensive. That means tenant screening and lease compliance matter more here than almost anywhere. You win up front, not in court.

• Local laws punish sloppy management
Security deposits, notices, screening procedures, and documentation have to be tight. If you run this market casually, you will pay for it.
• Six flats can be a great product type, but location matters more than ever
In solid pockets with stable demand, a good 6 flat can be a simple, durable asset with strong rent demand. In marginal pockets, the same building becomes a constant headache.

Local laws punish sloppy management

Security deposits, notices, screening procedures, and documentation have to be tight. If you run this market casually, you will pay for it.

Six flats can be a great product type, but location matters more than ever

In solid pockets with stable demand, a good 6 flat can be a simple, durable asset with strong rent demand. In marginal pockets, the same building becomes a constant headache.

My advice to a newbie is not “avoid Cook,” it is “do not be a remote newbie without a strong team.” If you are local or can build a strong team on the ground, there is money to be made. If you are relying on paper numbers and hoping the market behaves, you will get punished.

If you want, post the neighborhood or a sample address and the taxes, and people can give you real feedback on whether it’s a workable pocket.

Jonathan Klemm · Answer

Hi There @Mark Wolek - I look at Chicago the same way I look at life.  There are positives and negatives in every market.  And probably more importantly, there are investors making money every market.

In my opinion, there are a couple of key reasons that make people successful in any market

1.  They have a very strong team that have a very strong precense (contractor, property manager, agent, attoreny, etc.)

2.  They have some type of competitive advantage (they know the market well, they are a real estate agent, have family in the market, friends who are agents, an amazing network, etc.)

Aaron Zimmerman · Answer

It's not as bad as the news makes it out to be. That's not to say there's not issues though.

You are correct that taxes are an issue and they do get raised after sale, sometimes even in excess of PP. however, there's an appeal process.

Evictions are difficult but not impossible. I've only had one and it's taken 7 months but some of that was due to holidays.

Chicago has a lot of positives overall: diversified economy, relative affordability compared to most major cities, and of course lots of things to do. I have never had issues getting residents in my building because demand is robust and little supply. You do need to be aware of local laws, namely rent increase notices, security deposits, and screening protocols. I'd recommend checking out Chicago to visit and to invest

John Clark · Answer

Crime can be block by block. It can be avoided.eviction process is horrid, and there are scads of professional tenants. Unless you are the same race as the tenant, you WILL be accused of being racist.             the politics is very problematic. Lots of economically-ignorant politicians calling themselves democratic socialists, including the mayor, who thinks it is racist and oppressive to require people to pay their bills. You can’t avoid that.

City is beyond bankrupt. Pension debt is over $30 BILLION. Massive property tax hikes coming as wealthy flee. Ultra luxury homes are being sold for millions in losses. Ditto the State of Illinois financially. You can’t avoid that.

Bottom line, you can be a bit player with no expansion plans and located on site, or you can be huge with a national corporate presence. Out of state individuals should get their heads examined.

Eudith Vacio · Answer

Hey @Mark Wolek 👋🏽

Yeaaaah I feel you on everything you're saying but there are opportunities in every market. If you're afraid of evicting, then make sure you vet your potential tenants properly. I've only had to do 1 eviction and it took 3 months + if you're afraid of the taxes going higher, then make sure you contest them every year. I guess what i'm trying to say is that we all have fears but you shouldn't let it prevent you from NOT doing something. Anyway, best of luck in whatever you decide to do!

Evan Polaski · Answer

@Mark Wolek I am going to have to echo Jay, as I am familiar with Chicago and surrounding areas, but not personally invested there.  I am certain there are pockets you should not touch.  But if you are buying in high income, high demand areas, you are far more likely to have highly qualified tenants that will be respectful to your property and never run into issues with evictions.  The RE Taxes need to be factored in on the front end, but can generally be understood (just don't use the T12 taxes, as MANY jurisdictions across the country will reassess values to purchase price immediately on sale, but this can be known and assessed ahead of purchase).

Lastly, look at Breneman Capital and Drew Breneman.  He is buying a lot in Chicago, granted more core plus type buildings, and seemingly isn't having any major issues.But if you are looking at run down properties in sketchy areas in any city across the country, you will attract lower quality tenants.  So even the "easy to evict" areas will still cost you a LOT of money and time.  At one point in Dallas and Atlanta, evictions were still taking 3-6 months to process through courts, and then another couple months to get a Sheriff out to remove belongings.  And GA and TX are landlord friendly states.

Sarita Scherpereel · Answer

Chicago get's a bad wrap. But many out of state investors forget we are a city of neighborhoods. Which is the best! Because these different neighborhoods offer something for everyone. From house hacking to flipping to traditional investments there is opportunities on all fronts. Figure out what areas you want to focus on (typically this is based on budget and goals) then see if those areas are where you want to invest at this time.

Ervin Alex · Answer

Look up Chicago mobility map and focus in those areas

Aristotle Kumpis · Answer

I do know that Illinois in general is not landlord friendly. I recall having some clients invest in Cook county and it was not a good experience.

How bad is Chicago / surrounding Cook co really?

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