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.
@Jason Marcordes
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.
Sorry to piggyback on this thread but I’m curious for details on the negative outlook for Chicago?
I'm considering buying a SFH or small multifamily there in the upcoming month and all the locals here posting about tax increases, hard times ahead, etc have me concerned.
Would anyone be so kind as to elaborate with specifics?
@Eric Michaels completely agree with you, i live in the quad cities area(right next to iowa) and im seeing houses for sale but people are buying also, alot of new construction apartment buildings and hotels
@Justin Kurpius
What areas of Chicago are you investing in?
We’ve seen enormous appreciation in properties along the Milwaukee corridor - think downtown up to Hermosa. We estimate our three flat in Avondale has increased in value $100k+ since purchasing a little over a year ago. Taxes are on the rise in these areas, but so are rents.
@Eric Michaels
It’s about to wait for this coming crash. Will be worse than the Great Depression!
Oh yeah, there is a kook in every bunch. Probably also waiting for Jesus to come back any day for 2000 years? Build that bunker, stockpile those guns!!
Sorry to piggyback on this thread but I’m curious for details on the negative outlook for Chicago?
I'm considering buying a SFH or small multifamily there in the upcoming month and all the locals here posting about tax increases, hard times ahead, etc have me concerned.
Would anyone be so kind as to elaborate with specifics?
Well there are and always have been doom and gloomers. The truth is no one knows what is around the corner and there is no single right answer for the state or the city.
The facts are....the current expansion is quite long in the tooth and odds are we are past the peak. Buying now certainly risks future price declines. Buying anytime risks future price declines. Odds are the risk is higher now than normal.
Doesn't mean there will be a dramatic decline, but there might...as always.
The state and the city have serious budgetary issues that put us toward the bottom of most rankings, which could spell trouble. On the other hand, those issues and government dysfunction have existed literally for decades, and yet we keep chugging along. Despite constant doom and gloom predictions.
In order for those financial issues to be fixed, increased taxes will be needed. Taxes suck. Our taxes are predicted to increase as they have generally for decades. I don't know any places in the country where taxes are predicted to decrease. But the benefits of higher taxes can also be huge if they are used to fix the long term financial issues. And when everyone's taxes go up, it generally doesn't hurt your property in relation to every other property around you. Rents increase too. The vast majority of people don't have the flexibility to leave the state even if they wanted to.
You saw this yourself in California. Not long ago, some very bad things were predicted for your state. Huge deficits, government couldn't get anything done, the news crowing about people were fleeing to Seattle and utah and Colorado. Then all the sudden you are booming. Surplus, good government. None of the dire predictions came true.
So who knows? My point is don't get sucked in to the crazy predictions. There will always be people predicting extreme things. They are almost always wrong. They also tend to be the people who yell the loudest on the internet.
I have been here 30 years. And I plan to move soon....because as people move through phases of their lives, they look for new experiences. Its normal. People will go, people will come.
Crime, schools, taxes, weather, property values, corrupt politicians.... people bitching for 30 years about it all. But people are still here, its still thriving, growth and construction all over. Come and visit and see what you think. Predictions are just predictions....but results are real.
Make sure you are buying a solid property with solid numbers and a solid strategy, and you will be fine. And certainly visit the place you are investing. Listening to idiots on the internet or idiots on the news or trying to interpret statistics is no substitute for being on the ground and knowing a place. I find that it doesn't take long to figure out if a place is somewhere people want to live or somewhere they don't. That's all you generally need to know.
In Chicago and certainly in Illinois, there are places people want to live and places they don't want to live. Sometimes here the dividing line can be amazingly narrow...it can depend on which side of a street you are on.
Good luck with your purchase.
@Eric Michaels love the debate. I again respectively disagree. Best of luck to u in the Chicago area.
Thanks for being respectful. Not sure what there is to disagree with or debate.
I have made no claim or predictions to disagree with. I have not even said I disagree with your predictions. I would probably predict the same thing if asked to predict. But that would be folly.
I have just pointed out the true fact that all previous predictions about chicago and Illinois like yours have failed to come to pass....and there have been many for a very long time.
Humans are horrible prognosticators because we all have deep biases and narrow vision. I don't even listen to my own predictions very often because I am so frequently wrong and I know how biased I am.
The results are the facts. Predictions are not. Stating your predictions as fact (higher taxes will lead to lower values) is not useful or accurate.
@Ben I. try investing outside of Chicago. Look north and south into cheaper secondary regions of indiana and wisconsin beyond the border. We're at the top, buy something that has a high yield where you're not paying into someone else's 1031 account
@Eric M. thank you for the down to earth wisdom and detailed post, really appreciate it. From the outside looking in, it appears some of those issues seem to almost be factored into the prices, would you agree with that?
Last thing, are there any specific neighborhoods you'd reccomend with your wealth of knowledge, particularly at a price point <$300k which is something I could act on today. (Ideally multi-family).
Thanks again and happy to PM you if it's better for other folks on the thread.
Noah
@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.
I'm not sure if Sophie was referring to a certain condo building, but most properties in all of Hawaii are fee simple, not leasehold. There are LH properties still around, I'm looking a few right now personally and will hopefully be buying 3 LH condos this year. But as someone that worked professionally in RE here for years and has been investing here, analyzing deals constantly, and knows the market, I'd estimate that 90% of RE here is FS - not LH.
Again, Sophie may have been responding to another comment directed at a particular building, but just in case, I wanted to make sure false info wasn't being spread.
I understand that on Oahu, many SFHs were LH up until the 90s, but most, if not all, were converted to FS.
Also note that just bc a property is LH, doesn't mean it's a bad investment. Just gotta know what to look for and make sure the numbers make sense. Like I said, I'm hoping to buy a few LHs myself this year.
I agree with @Eric M. are taxes and such going up, absolutely but when you look at other areas with high taxes you also see high rents and property value.
With that being said we are at the top of the market in the high end areas of the city, so we may have a price correction soon, but if your buy and hold it is nothing to worry about. if your looking for new property invest in areas that are still growing and rents are on there way up.
@Eric M. thank you for the down to earth wisdom and detailed post, really appreciate it. From the outside looking in, it appears some of those issues seem to almost be factored into the prices, would you agree with that?
Last thing, are there any specific neighborhoods you'd reccomend with your wealth of knowledge, particularly at a price point <$300k which is something I could act on today. (Ideally multi-family).
Thanks again and happy to PM you if it's better for other folks on the thread.
Noah
The areas I know that are on the rise are Albany park, Humboldt park and Rogers Park (Rogers may have already gone up). Of course, the entire southside has a lot of potential as the government is making some areas opportunity zones. There are some significant benefits for investing in those areas but I'm no expert on what those are...yet. GL. Btw 300k will only get you a two flat on Chicago's north side. My first deal was a 2 flat in Rogers at 350k in 2015. It's now worth over 600k without any significant improvements.
@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.
I'm not sure if Sophie was referring to a certain condo building, but most properties in all of Hawaii are fee simple, not leasehold. There are LH properties still around, I'm looking a few right now personally and will hopefully be buying 3 LH condos this year. But as someone that worked professionally in RE here for years and has been investing here, analyzing deals constantly, and knows the market, I'd estimate that 90% of RE here is FS - not LH.
Again, Sophie may have been responding to another comment directed at a particular building, but just in case, I wanted to make sure false info wasn't being spread.
I understand that on Oahu, many SFHs were LH up until the 90s, but most, if not all, were converted to FS.
Also note that just bc a property is LH, doesn't mean it's a bad investment. Just gotta know what to look for and make sure the numbers make sense. Like I said, I'm hoping to buy a few LHs myself this year.
What I can't understand is in which situation would a LS be a good investment? It almost seems like buying a stock option near the end of its life.
@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.
I'm not sure if Sophie was referring to a certain condo building, but most properties in all of Hawaii are fee simple, not leasehold. There are LH properties still around, I'm looking a few right now personally and will hopefully be buying 3 LH condos this year. But as someone that worked professionally in RE here for years and has been investing here, analyzing deals constantly, and knows the market, I'd estimate that 90% of RE here is FS - not LH.
Again, Sophie may have been responding to another comment directed at a particular building, but just in case, I wanted to make sure false info wasn't being spread.
I understand that on Oahu, many SFHs were LH up until the 90s, but most, if not all, were converted to FS.
Also note that just bc a property is LH, doesn't mean it's a bad investment. Just gotta know what to look for and make sure the numbers make sense. Like I said, I'm hoping to buy a few LHs myself this year.
What I can't understand is in which situation would a LS be a good investment? It almost seems like buying a stock option near the end of its life.
When it's not near the end of the lease lol
If the lease doesn't have much time left that starts to bring up some uncertainties. But in reality the most likely outcome is that the lease holder renews the lease, or the AOAO buys the lease and converts to fee simple.
Bottom line, if there's plenty time left on the lease, and you can make your investment back plus a solid return well before the lease expires, then it's really just weighing the opportunity cost you could lose if, by some unimaginable chaotic anarchy, the lease holder is allowed to just take your condo from you. If that does happen, you've still made a good return, you just lose the opportunity to sell your asset for the equity. I think that's a long shot though, and you should be able to determine the lease holders options by reviewing the lease.
Aloha! For your Chicago property HELOC you may need to pull those funds out before you move while it's still your primary. Is this a residential or commercial HELOC?
What are cap rates running in Hawaii?
Aloha! For your Chicago property HELOC you may need to pull those funds out before you move while it's still your primary. Is this a residential or commercial HELOC?
What are cap rates running in Hawaii?
It's a commercial HELOC so I'm good. No idea on CAP rates there. Haven't looked too much yet.