Is it smart to invest in Illinois, specifically Cook County?

[Ryan Boren]

Hey BP, I currently live in the south suburbs of Chicago near Crete, IL and own a SFR in Steger, IL on the Will County side. My taxes are not horrible approximately $3,500 a year on a 1100 sq ft 3 bed two bath. I understand I can go across the border (Indiana) and pay half of that in taxes, but after much searching and dozens of offers being rejected from all cash buyers I've decided to stay local in the south suburbs. Also, I've found the price of rental homes in Indiana to be around 115k compared to Markham, Country Club Hills, Hazel Crest, etc where you could possibly find a move in ready house for 40k with higher rent as well. I do know with cash there are some good deals from investnwi.com (etc), but unfortunately I do not have the cash. I am curious to see if people are still interested in investing in Cook County and do you see the taxes going so high it would be impossible to make money? For example, park forest has 1100 sq ft average homes with an 8k a year property tax bill. That's too much taxes to have any type of return on investment. Just interested in your thoughts. Thank you, Ryan B.

[Robert Leach]

Hi Ryan,

I have worked and invested in the Chicago market for many years now although the following is merely my opinion. Over my professional career, I have found there is more opportunity in a down market than up and frankly I think the numbers back this statement up across the board. Here is a great editorial on this very topic published in December of last year.

http://www.chicagotribune.com/business/ct-chicago-...

Taxes are not going away here or anywhere else. Investing in Indiana for instance has some benefits for sure but the potential growth there is far less than the upside of a Chicago property in 10 years. Take for instance Chicago's near South neighborhoods like Hyde Park or Jackson Park. The Obama Presidential Library will be constructed there which obviously means the city and state intend on policing and cleaning up the area. What do you think the upside on a buy and hold strategy is in those areas? Sure there is risk but an educated investor weighs them and decides how to bet. Me personally? I am buying up as much as I can in those areas especially within walking distance of the proposed library site. 

Would I rehab to the nines? NO! I would make repairs to bring the property into FHA/Section 8 standards and bide my time renting the property out a few years. My personal opinion is many of those properties could double in value over a ten year span but hey...what do I know.

If you are looking Northside, find a bungalow and build a 2nd story addition. The numbers work for such a project say around Logan Square and surrounding neighborhoods. I have seen ARV's as high as $650k.

If you follow a crowd you will be competing with them at some point, my suggestion is to look for the gems, know city plans for the neighborhood and by all means, drive the blocks. The city is a block by block opportunity. To know your target areas is to gain wealth.

Sorry for rambling but these kind of posts always amuse me with some of the fear responses. You can't steal second with your foot on first bro!

May your bottom line always be above the water line!