Far South Chicago

[Mike York]

I see a lot of wholesalers offering properties without a lot of sells.  Is this area hard to find buyers for or do buyers want to be closer to the city?  Areas like University Park, Steger and nearby.  They seem like some nice homes.  Anyone with experience in this area care to shed some light?  Debating if I should give effort around there.  

[Mike H.]

I actually have a couple houses in that area. Steger anyway. Crete, etc.

Some of the houses are actually really nice. The problems with those areas are:
1) Some areas are not the greatest. University Park is awful. Steger is so-so but might be going down. Crete is decent. Just need to be careful.

2) Some of those are in cook county. Stay OUT of cook county. Its a landlord nightmare. Terrible landlord laws and the tenants all know it. I have a couple in southern cook county and can't wait to sell every last one of them.

3) Taxes. That is the thing that an Indiana-ite like yourself is going to choke on. The Steger tax rate is almost 13%!!!!!    Indiana has a law that caps the rate at, what, 3.3%? 

That rate equates to 4.3% of the assessed value and that eats away a ton of cash flow.

So if the house is assessed at 100k in steger, your taxes are going to be 4,300. One other thing, assessments do NOT equal market value down here either. That 100k assessment is more likely only worth about 60k in the real world. These counties in illinois are so strapped for cash, they make getting the assessments reduced to their actual value almost impossible.

So would I recommend anyone buy any of these houses down here. Not a chance. Taxes and assessments are so crazy high, I just don't see the long term value there.

Crete has some really nice homes for 100k or less. But the assessments are all in the 150's so the taxes are going to run you 5k to 6k.  Its just not a good model IMO.

If this state ever passed a bill like Indiana that restricts the tax rate to 3.3% instead of allowing the counties to go to any number they want (i.e. over 12%), then I would recommend you pick every house up here that you could.

Until that time, I'd avoid this area. To me, areas like Merrillville, Scherrerville, Crown Point, etc would be far better if I was living in Indiana. Landlord laws appear to be much more favorable and the taxes are a huge differentiator in being able to cash flow at a much higher rate.