Why I LOVE and Hate Investing in Chicago

5 Replies

I LOVE investing in Chicago. And I hate investing in Chicago.

With regard to my LOVE for Chicago, I have 5 data I want to share with you.

1)  Volume of Home Sales Have Gone Up in the Past 3 Years

 2)  Housing Supply Has Been on the Decline in the Past 4 Years

 3)  Foreclosure Filings, An Inverse Leading Indicator of Price Movement, Has Been on the Decline in the Past 4 Years

 4)  What's Cool About the Increase in Sales, Decline in Inventory and Decline in Foreclosure Filings is that All These Are Backed By JOB GROWTH In the Past 4 Years

 5)  As Can Be Seen in the Case Schiller Index, Over the Next Few Years, We Should See Price Appreciation in Chicago

SO why do I LOVE investing in Chicago?

Based on the above 5 data, Chicago is GREAT for fix-n-flips, rent to own and appreciation play. And those are exactly what I do in my real estate business.

But why do I hate investing in Chicago?

Corrupt politicians and high property taxes. 

The high property taxes mean BAD news for property owners in the border cities where Illinois borders with Wisconsin and Indiana. For example, I can understand why people living in Zion might want to move to Wisconsin due to lower property taxes there. Also, people living in Crete, Calumet City, Chicago Heights will also want to move to Indiana, again because of the latter's lower property taxes.

Higher property taxes also decreases cashflow...so I hate investing in a rental property in Chicago because taxes eat in to your cashflow. 

Now having said the above, there are always GOOD fix-n-rent (for cashflow) deals and BAD fix-n-flip deals in Chicago. The above is a big picture view but there are good deals in every market. Of course, you have to learn your market and do your due diligence.

What about you? Where do you invest and why? DO you love investing where you are or do you hate it?

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Thanks for the data points.  As devil's advocate, do you consider the u6 unemployment rate at all?  I wonder if it captures the overall picture better given changing qualifications.  Also, is there any long term value to a strategy that involves purchasing in the seasonal supply dips (Nov/Dec/Jan)?

I am a newbie and still looking to get into the game.  Still trying to figure out if Chicago (I live here) is the right market or if surrounding areas like MIL/Peoria/Bloomington may be a better fit for long term buy & hold.

As an owner in Cook county, I am also watching property taxes closely as that is where I see the city going to dig itself out, and it's going to hurt!

Thank You for sharing information

Wendell De Guzman I prefer the Sunbelt and the Southwest. I'll take the combination of low taxes, appreciation, population growth and climate all day. I looked long and hard at Chicago about two years ago when our AZ market recovered and was scared off by the outrageous property taxes and landlord laws. Rents are higher but the Capex in the old buildings is a killer. If I was local and on the ground it would be a different story but I'm not dumb enough to think I'm competing successfully w locals like you.

Great charts!  Thank you!

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