Texas investor looking to invest in Chicago

18 Replies

Hello,

I'm an investor located in Texas and I'm interested in branching out to the Chicago area. Can anyone recommend agents, contractors, property managers, and lenders that specialize in that area?

Thanks.

Hi Joel,

I'm a short sale agent in IL, newbie investor and I'd be happy to share my info on the area.  I'm out in the Chicagoland suburbs, however, not in the city itself, so my connections run to that side of the business.  I also coordinate a Meetup group for investors to network and find business partners.  You can connect with me on BP anytime.

Cheers!

Joel,

I am interested why you wish to invest in Chicago. I am a Texas transplant and am considering just the opposite. Property values are rising at above average rates in Texas and below average here due to our weak economic climate.

I would ask the same question. I guess my thoughts would be:

1) The chicagoland area and illinois has super high taxes (3 to 4% of the assessed in most of the chicagoland suburbs).  The mayor of chicago is pushing through one of the largest property tax hikes the city has ever seen in history. And both the city and the state have one of the most underfunded pension liabilities in the entire country as a state and a city.

Thats not typically the type of 1-2 punch people would look at when choosing which state to invest in.

2) On the plus side. The numbers for rentals here do seem to work pretty good. And I also believe the competition in Texas is extremely crowded. Not that some areas up here aren't difficult too. But I think down there it seems there is just a lot more competition.

 Down here, you can buy homes in the suburbs that are worth 140k to 150k and rent them out for 1350 to 1,400. Which means if you get them at a reasonable discount, you can be all in at 100k to 110k on those.  Not bad.

But the taxes are killing us.   In some cases, the taxes are higher than the mortgage payments on these homes. I've got a house thats assessed for 100k and I'm paying 4k in property taxes.  And thats one of my earlier houses that is a lesser home.

Most of my stuff is 130k to 150k. If they were in the same town, it would be 6k in taxes.  Not easy to make money on those numbers.  And thats not even in the city. The school district is actually junk there.

Additionally, Cook County (chicago and some of the tighter burbs are in cook county) has one of the most unfavorable landlord/tenant laws you're going to come across.  I would strongly suggest you stay out of Cook County if you invest here.  Evictions can easily take upwards of 4 to 5 months without much finagling by the tenant.

Its a crazy game that this county allows.  Even if you get a quick ruling, it takes a couple of weeks to get the court date, then the judge gives me 2 to 3 weeks to stay on top of that and then the sheriff's dept takes 4 to 6 weeks.  At best, you're looking at about 2.5 months.  But most of these tenants know the game. So pushing it to 5 or 6 months is definitely a possibility.

Thats a huge risk compared to what I hear texas is like. 30 days or less to get them out.  That mitigates your downside quite a bit there.

@Joel C. Count me in for another inquiry on "Why Chicago?" From everything I read about Texas (economy, job growth, landlord friendliness) it seems like an ideal place to be. As a side note, our mayor just announced that we'll be undergoing our largest property tax increase in history. 

Joel,

Chicago is a great place to live and invest for many reasons. The most notable the prices are affordable and income higher than just about every other city in country. For example I sell 4 bed single family homes in country club hills, illinois that generate $1,850 in rent with country voucher tenants for $145,000 turnkey. Yes the taxes are a little higher than Texas but the income is also much higher and I get the benefit of my rent wired to my bank account every month (meaning HUD pays the rent not the tenant). This area has a low crime index and very desirable as a rental. I would like to talk to you about the different sub markets when you have time. My number is posted below. Thx!

I tend to agree with Mike and other folks, especially on his note on Cook county+property tax issue. 

Though there are lots of downs for Chicago market, there are some good opportunities too. I like DuPage county (all of my properties are in DuPage county) much better than Cook or Will county. I won't go negative for Chicago since there are cash flow properties out there. I just rehabbed and rented out two units in B+ class neighborhood for $1450 and $1400 respectively which gives me approx. $1400 p.m. NET Cash flow...not bad....

Property Tax is the most frustrating and strange phenomenon here in Chicago. I am paying $3K+ for one of my 1150 Sq.ft unit in Wheaton whereas the tax for a similar unit in Glendale Heights (less than 4 miles) is $750.  

so, yes Joel...you will for sure find some lucrative deals here....so good luck with that....

Thanks

Kumar

@Joel C. it would interesting to know more on your outlook on investing in Chicago while based in TX. while i agree with most that have mentioned above - there are beneficial and lucrative deals still around. I am a Broker and can assert on the western suburbs - prices are going up so good time to get in if you get a property at the right price. 

feel free to connect. 

Hi everyone. Thanks for the feedback. My main reasoning for Chicago is I've heard good things about the market so I  thought I'd get some feedback and check it out. Yes Texas is great but many markets are exploding so it's more difficult to find good deals and people are willing to grab a deal at a loss just to grab the deal.

I'm also looking at Kansas City, and Indianapolis as potential areas as well. I was mainly looking for contacts I could reach out to in order to get a gauge of the market.

Thanks again for everyone's feedback.

Joel

Im an investor in Chicago and all though I agree with many of the post as to why would you invest here I also can't help but wonder why wouldn't you! 

I was born and raised on the near south side of the city and I have to say I absolutly love this city. Its true taxes are high but so are rents, and yes the laws favor the tenant but that just means you need to be a little more picky about who you rent to. In my experience there are far more good tenants than bad one. 

I believe  Chicago will grow faster than any other big city in the next five years and there are still plenty of deals to be had.

good luck 

@Joel C. Those are all good markets. Chicago is more expensive than either Indianapolis or Kansas City and the returns are somewhat lower. Illinois is not a particularly landlord friendly state and varies by county. Indiana on the other hand has been ranked the 2nd most landlord friendly state and MO is also landlord friendly. I know the Indy and Kansas City market well. Feel free to reach out if you'll like more insight.

Check out NW Indiana- the forgotten Chicago suburb.  It's a great place to invest because we get the Chicago money (several towns are bedroom communities for Chicago commuters) plus the low taxes and friendly landlord regs. I've never had an issue with my rental because people jump the border for the better schools (vs south Chicago suburbs) yet lower cost of living. The only downside to investing in IN is alcohol sales; you can't buy on Sunday.

@Joel C. Kansas city is a good market as I buy in the area. You can go to google and type in homes for sale  (city you want to research) then find a realtors website and go look through listings just to give you an idea on what home prices are in the price ranges you want to stay under. You can find rei groups in each city also to get more information about investment properties in any city.

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