Chicago, IL · Member since 2016 · 23 posts · 14 votes
All,
I'm looking for a couple of opinions here on moving some equity out of Chicago and utilizing the 1031 exchange to secure a property in a surrounding county that is more tax favorable. Then building that we own is currently cash flowing, but we struggle with the fact that rents are skyrocketing so that we can cover the tax increases and other city expenses. Our taxes have gone up 85% since 2010. In my opinion, it's going to become unsustainable given the current economic situation in Chicago. We have the opportunity to unload some equity in this building and move it into a property in the south suburbs that is around an 8 Cap rate and producing much more cash than our current situation (newer construction). It would be a cash-flow proposition vs. the "appreciation" proposition we are currently in. The Chicago building is a beautiful one that we have invested heavily in, but it may be time. I'm just interested to hear from other Cook County investors on their opinion.
@Glenn Hoffman yes, hard for me to find MF in Chicago that make sense on paper. Some of my borrowers adventure out to God forgotten suburbs and as far as Milwaukee but, I guess I need to get out of my comfort zone.
Looking at Milwaukee seems like an act of desperation LOL
Real Estate Agent · Austin · Member since 2019 · 100 posts · 28 votes
7y
@Glenn Hoffman crook county? yeah, Ive been there... I have a house in hydepark next to Univ. Purchased couple years ago for 280k. Just received a letter from acessor that they appraise it fir 459k. No way it costs as much. I will keep it for now as it rents for 3950. But seriously, the countt eats all profit.
Lender · Chicago, IL · Member since 2018 · 352 posts · 147 votes
7y
@Glenn Hoffman yes, hard for me to find MF in Chicago that make sense on paper. Some of my borrowers adventure out to God forgotten suburbs and as far as Milwaukee but, I guess I need to get out of my comfort zone.
@Glenn Hoffman yes, hard for me to find MF in Chicago that make sense on paper. Some of my borrowers adventure out to God forgotten suburbs and as far as Milwaukee but, I guess I need to get out of my comfort zone.
Looking at Milwaukee seems like an act of desperation LOL
Lender · Chicago, IL · Member since 2018 · 352 posts · 147 votes
7y
@Marcus Auerbach ha ha, you crack me up. Not when you live 10 mi south of the WI border :-) and not when you get $3300 in rents on a fourplex under $200k. You just ask, where do I sign?
Chicago, IL · Member since 2016 · 23 posts · 14 votes
7y
@Diana Muresan I agree with you there. I think that investors really need to venture out and find new MSAs that work with the numbers. Of course there's multiple bids on this gem that I found and I really have no chance as my property would be a contingency, and on top of that, a 1031. Thanks for your reply. I'm not alone....
Investor · Chicago, IL · Member since 2009 · 1k+ posts · 1k+ votes
7y
You say that your rents are raising. They have totally spiked in the last ten years, for sure. Are they keeping up with expenses? Plus, you may have had quite an appreciation if your property is in some locations on the North side. Do you protest your taxes? An unfortunate ritual for Cook County investors.
Next, you mentioned South Suburbs. I think you can do better than this. The taxes are very high in some of these suburbs. I have quite a few investments in these suburbs and I found that I made more money in the City.
I find that the south side of Chicago actually is a good place to shield yourself from the taxes. It takes experience to be in that market. Also, NW Indiana is interesting, but I've never ventured there yet. I've looked into Kenosha/Racine and I found that the rents were low there.
Chicago, IL · Member since 2016 · 23 posts · 14 votes
7y
Brian, thanks for your note. Yes, we do have some appreciation in the building as it was a "value add" scenario. That's one of the reasons we are considering moving our equity we have built into something larger. I just increased the rents $500/month collectively for the three units, so the rental market seems to be keeping pace with the egregious expense schedule. I did appeal my taxes through the usual firm that I have used, but the results were not great. I am probably going to switch as I have some other recommendations. I appreciate your insight.