Anything I should know about Illinois before BRRRRing SFR?

Question

Just wanted to see if anyone is investing in the Calumet City or Dolton Illinois area. Wanted to see what the market is like and if anyone has any tips on the area. Also if Illinois more of a landlord friendly state or not. Any advice will help I'm a newbie and am looking for a good out of state market. I live in Orange County California which is a pretty expensive area for rentals.

John Warren · Answer

@Adrian Beltran a lot of the posters here are from other states, and I am sure they have their reasons for not liking Illinois. Asides from several obvious issues with higher taxes, the Chicago area is the third largest market in the USA. The opportunity here is truly incredible. With that being said, I would take time to visit areas like Dolton and/or Calumet City before you start investing there. Those areas are closer to the Indiana boarder and they have very little going on economically which is why the population is declining. As an out of state investor, I would personally look to invest in areas that are more stable so that your paper returns end up being real!

If you want to start following the trends, check out the Straight Up Chicago Investing podcast that @Mark Ainley runs. They have done an awesome job of getting the gritty on the ground info you need to find out about different areas of the Chicago market.

Darius Ogloza · Answer

Property taxes.  Illinois has massive state employee pension liabilities.  Investor-owners are an easy target for much needed property taxes.

Kenneth Garrett · Answer

@Adrian Beltran

Illinois is a tenant friendly state especially cook county.  Dolton and Calumet City are South Suburban areas.  I invest in the northwest suburbs and southern Wisconsin.  You can make money anywhere if you can buy right.

Jon Schwartz · Answer

Adrian, Calumet and Dolton are both in Cook County, which has had a declining population since 2000.

There's a reason real estate doesn't appreciate in some areas!

Best,

Jon

Crystal Smith · Answer

We no longer buy SFR's to hold but we have clients to do & we have owned SFRs in Dolton in the past. Dolton & Calumet City are decent markets to hold SFRs but...... you must closely examine the taxes & exemption on every deal. Many properties on the market have homeowners or senior exemptions or even senior freezes.  When you purchase as an absentee landlord your taxes will skyrocket. You have to build the escalation of taxes into your cash flow numbers.  While we have clients that have invested in Dolton we stopped because of the Village Inspectors. We often had requests to fix things that were not broken by the Village. We get the report from the inspector, spend time looking to see what he/she was talking about, found nothing, then invited them back a week later and passed. Passed after doing nothing. There was a pattern & we decided that we had enough. Never had that problem in Calumet City.

The question of landlord versus tenant-friendly. My opinion: Do the right thing as a landlord and the question becomes moot.

Joel Zawko · Answer

Chicago resident here, I live in Logan Square. We have a decent amount of rentals in Chicago, mostly Section 8 on the South and West side. The wife owns a property management company and is also an agent, so I think we have a pretty good perspective of the Chicago market. I would recommend buying in the city 100%. There are some serious deals, where a 20-30% ROI is possible, you just have to put in the work. We seem to find them, just need to look. I will say, the political climate is not the best, but I would not let that deter you from getting after it. Best of luck.

Kenneth Garrett · Answer

Although taxes may be higher in Illinois, rents are also higher then it’s other fellow Midwest States.  It’s all relative. There are good solid areas both in the city and certain south and north suburbs.  I suggest you attend a local REIA or meetup and discuss investing with local investors.  Since these meetings are Zoom driven you can gather proper information with the local markets.

Corina Eufinger · Answer

I'd say the thing to know is...don't do it.  (LOL...sorry...) As is mentioned above IL is overtly tenant friendly and anti-landlord really.  Personal taxes and business taxes will continue to rise as their state budgetary crisis does.  Eventually something will give and it will likely be an increasing departure of businesses (and their jobs) to less expensive states.  Heck even their sales tax will rise again in attempts to address their financial crisis.  They will look for more income rather curb spending and the only thing that will do is drive business away eventually.

Love visiting Chicago, Schaumburg but I would never live or invest in IL.

Calvin Ozanick · Answer

Northern Illinois always makes me want to encourage people move just a bit north to Southern, WI. The Rock County market. Beloit/ Janesville have done a ton of growing recently. Major business growth (Amazon, ABC Supply, Dollar General) has improved values, vacancy, employment and the economy is booming with private funding. The low entry price makes it very attractive to all types of investors.

Melissa Wesling · Answer

My LTRs are in the southwest suburbs (not Cook County).  Different cities have different rental regulations (rental license, inspections, etc), and also if there's an HOA, they have their own restrictions but nothing currently statewide.

Anything I should know about Illinois before BRRRRing SFR?

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