Chicago/Illinois Property Tax Hikes Making Me Jittery About Investing

[Sid Franklin]

Chicago is a hot market now but the State, County and City all have significant public employee pension and healthcare debt (that cannot be reduced except maybe in a bankruptcy).  Property taxes are already high, but they are likely to go a lot higher over the next 5 years as the various units of government finally start dealing with their debt issues (I work in and out of government so I'm very much in the know on these issues).  To make matters worse, there is also a high likelihood of cuts to schools, parks, public safety and other government services.

Here's my issue.  I would love to invest in real estate now because I have a nice pile of cash that's ready to go but I'm worried about the following.

1.  Borrowing money for a real estate investment now seems too risky because of the high likelihood of property tax spikes;

2.  Buying with cash even seems risky if the rents cannot keep up with the property tax hikes;

3.  The value of real estate is likely to drop (like in Detroit) once the property tax deluge starts in earnest; and

4.  The population growth in Chicago might slow down if taxes are too high and the bad press on the debt is too great.

Am I missing something?  Can I pass on significant property tax hikes to tenants?  Can I do this even if the quality of schools and other government services are cut?  Is Chicago another Detroit or is it too big to fail?

Should I buy or continue to stay cash rich and wait for the tax spikes and a drop in real estate prices?

[Eric M.]

I guess I am wondering what Sid's agenda is for continuing this thread with his numerous posts all doom and gloom. My views and concerns are not a lot different from yours but I don't obsess about it. The market is still pretty darn good.

Do you think you are educating us Chicagoans about the situation.  I assure you we are already aware.

Are you attempting to sway out of towners against investing in Chicago? What is the point of that?

If you are attempting to sway people in power who may wake up and fix the system, I am not sure this is the ideal venue for that.

If you are so down on the area, you should probably change your investing but I am just not sure why you are so intent on spreading the doom.