Investor · Chicago, IL · Member since 2017 · 101 posts · 52 votes
Hi everyone. Posting here to see if I haven't thought of something. My family and I are moving to Oahu in a month. There I will be working as an engineer. Leaving behind in Chicago 2 properties; a two-flat and a three-flat. They are all going to be fully rented out and I don't plan on selling them. 80k of HELOC is available to me from one of them.
Once in Hawaii, I will not be able to invest in real estate locally due to the million dollar entry requirement for Oahu. I am considering a few options.
-Buy back taxes in states where it makes sense (NC, FL & Texas)
-Buy condos in Chicago (pro: relative maintenance free)
-Partner up with a friend and BRRRR in Chicago
If you were me what would you do? We plan on being in Hawaii 10+ years.
My contractor’s real estate agent said the last three homes she sold were all people leaving state.
My water softener guy said he is seeing A LOT of the wealthy in the Barrington area leaving the state.
It’s not a good situation right now with no improvement from what I can see.
Good luck!
Not saying all that anecdotal stuff we hear is not true but it is only a sliver of the story.
Like who is buying the house? I just sold my house and am staying in the city. The people who bought it were executives from Belgium moving here. You can't just look at half the equation.
Each of us has a very myopic view of what is happening that is colored by our own opinions. If we think Illinois or Chicago is going to ****, we talk to people about that and miraculously find other people who think the same. We pay attention to those news stories and the statistics which confirm our opinion. If we think things are great, we happen to run into others who think they are great. We tend to see the construction, the activity, etc.
I just bought a particular model car for my kid. All the sudden I am seeing all kinds of the same cars on the road. Humans are confirmation bias machines.
For example, did you know that for 5 straight years, 2014-2018, Chicago was the number 1 city in the country for corporate relocations?
There are a couple of "think tank" type groups that are behind much of the "hype" about population loss. They are political groups who are against taxes. (illinoispolicy.org and macdonald hopkins) Taxes are easy to be against, but the political groups do exaggerate, cherry pick data and hype it to make their point. They are very effective.
Another example, amid all the population decline news, they almost never mention that they largest demographic leaving the state is retired people. Is it really so shocking that retired people move south? But as much as we love old people, they don't contribute a whole lot to the economy relatively speaking.
Ask a 25 year old and they know ALL KINDS of people who are moving here for jobs. Ask a 60 year old and they know ALL KINDS of people moving away to retire and stop shoveling snow.
Just a different perspective. Doom and gloom has been predicted since I moved here 30 years ago. It hasn't happened yet.
Rental Property Investor · Member since 2017 · 84 posts · 41 votes
7y
@Ben I. Consider diversifying your portfolio and try other states. Illinois is going to get worse before it gets better. I live in Illinois and will most likely start to deploy capital in surrounding states.
Investor · Chicago, IL · Member since 2015 · 154 posts · 91 votes
7y
@Ben I. With a new assessor in town, the taxes in Chicago are going up again, especially in MF. Although I'm not a huge fan of condos, for out of state investors looking for something more passive, added with less of a tax liability (vs a MU), condos don't sound like a bad option.
I do also agree with @Justin Kurpius though. Now is a great time to explore other states and invest that capital elsewhere. Most of us never make it out of Chicago/IL with our money....consider it a golden opportunity! I saw a presentation by Neal Bawa recently about a recent investment activity that blew my mind. His presentation summarized into one sentence; invest in somewhere warm, people are leaving the midwest and north (cold states) in droves.
Investor · Chicago, IL · Member since 2017 · 101 posts · 52 votes
7y
@Jason Marcordes that's exactly what I'm thinking too. I told myself I won't buy any more Chicago properties but the easiest thing would be to buy more Chicago then out of state. I agree with you though. It might be harder but it's better.
Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
7y
I am not sure why you think there's a "million dollar requirement" on Oahu.
There are currently almost 1000 properties for sale under 500k.
You can get condos down below 100k and masses of them in the 200 to 400 range.
Even single Family homes under 500k. Makiki, kapeolani, ewa beach...lots of places where sub 1 million pricing is the rule rather than the exception. Other islands too. Regular people with regular jobs live there too and they need housing.
Investor · Chicago, IL · Member since 2015 · 154 posts · 91 votes
7y
@Ben I. I think it's just the initial purchase. Once you take the initial leap of faith (and then overcome an obstacle or two) it will get easier and easier. It's just venturing into the unknown that can seem scary. Finding a good local team is the most important part and luckily you have an amazing resource (BP) to do just that!
My contractor’s real estate agent said the last three homes she sold were all people leaving state.
My water softener guy said he is seeing A LOT of the wealthy in the Barrington area leaving the state.
It’s not a good situation right now with no improvement from what I can see.
Good luck!
Not saying all that anecdotal stuff we hear is not true but it is only a sliver of the story.
Like who is buying the house? I just sold my house and am staying in the city. The people who bought it were executives from Belgium moving here. You can't just look at half the equation.
Each of us has a very myopic view of what is happening that is colored by our own opinions. If we think Illinois or Chicago is going to ****, we talk to people about that and miraculously find other people who think the same. We pay attention to those news stories and the statistics which confirm our opinion. If we think things are great, we happen to run into others who think they are great. We tend to see the construction, the activity, etc.
I just bought a particular model car for my kid. All the sudden I am seeing all kinds of the same cars on the road. Humans are confirmation bias machines.
For example, did you know that for 5 straight years, 2014-2018, Chicago was the number 1 city in the country for corporate relocations?
There are a couple of "think tank" type groups that are behind much of the "hype" about population loss. They are political groups who are against taxes. (illinoispolicy.org and macdonald hopkins) Taxes are easy to be against, but the political groups do exaggerate, cherry pick data and hype it to make their point. They are very effective.
Another example, amid all the population decline news, they almost never mention that they largest demographic leaving the state is retired people. Is it really so shocking that retired people move south? But as much as we love old people, they don't contribute a whole lot to the economy relatively speaking.
Ask a 25 year old and they know ALL KINDS of people who are moving here for jobs. Ask a 60 year old and they know ALL KINDS of people moving away to retire and stop shoveling snow.
Just a different perspective. Doom and gloom has been predicted since I moved here 30 years ago. It hasn't happened yet.
Investor · Pukalani, HI · Member since 2017 · 413 posts · 291 votes
7y
You must be stoked!
You can still invest in Hawaii... Just gotta find a niche that makes sense. I literally just posted about some of my deals and properties I target in another thread..
Just contact me if you actually consider the properties I invest in, to make sure we don't compete on deals and drive the prices up on each other! lol Actually reach out to me if you are interested in these units at all because I wholesale some of them. Working on wholesaling one of them right now in fact.
Rental Property Investor · Member since 2017 · 84 posts · 41 votes
7y
@Eric Michaels. Great perspective. I respectively disagree. The numbers for the last few years shows Illinois leads the pack in population loss. Increasing taxes decreases the value of the asset.
I’m sure u will do just fine. I need some appreciation, and, IMO, will not find it in IL at this point in time.
Real Estate Agent · Austin · Member since 2019 · 100 posts · 28 votes
7y
@Ben I.
If I would be you, I would enjoy Hawaii. I would not purchase more in Chicago. I have couple properties in Evanston, the tax is huge. They soon will make no sense.
I would partner up with someone to break into Hawaii RE. There is also big island where the entry is low.
Did you check foreclosures? I see many on hubzu below 600k.
Chicago, IL · Member since 2017 · 81 posts · 87 votes
7y
@Ben I. I would keep your properties here in Chicago and pay attention to the market. Chicago has some
Tough times ahead but it’s not going to just disappear. There is just some real hyperlocal trends that are dictating the growth within the state. Check this out:
I would do everything I could to buy a multi unit in Hawaii that you could live in. Make the numbers work, you’ll build up a solid network there before you know it and have plenty of options for Mgmt by the time you head somewhere else.
Investor · Chicago, IL · Member since 2017 · 101 posts · 52 votes
7y
@Sophie Maisel
The leasehold thing sent me for a spin. I had no idea what that was but it sounds like a horrible investment especially since some I saw expire in less than 10 years.
@Eric Michaels. Great perspective. I respectively disagree. The numbers for the last few years shows Illinois leads the pack in population loss. Increasing taxes decreases the value of the asset.
I’m sure u will do just fine. I need some appreciation, and, IMO, will not find it in IL at this point in time.
When the property valuation numbers actually line up with your prediction, let me know.
Population loss of .5% is a macro thing. It has virtually nothing to do with our 10 or 20 properties. We are micro.
Why do the highest tax states have the highest property values? Hmmm.
Maybe the obvious results of higher taxes is not so obvious.
Which is more important, population going down or GDP going up?