Chicago Rentals VS. NW Indiana Rentals

[Matt DuSold]

I am looking for anyone who owns property in these areas or has knowledge of the situation. I have always been told to stick in NW Indiana strictly because of eviction laws. But lately I have been able to find property in south Chicago at great prices.

The only argument I know of right now for NW Indiana are the eviction laws. I would guess taxes would be cheaper as well.

When looking at south Chicago I have found 6 flats that are all 3 bed 2 bath and you could be all in for about 225,000-235,000 depending on repairs. With each unit at $1,000 plus you would be cashflowing real nice. With that being said I have heard eviction laws in Cook county are bad enough to make you wish you never invested. I have though about section 8 tenants which would be great for payments but I don't want to evict a tenant and not get rid of them until a year later.

Let me know if someone can help me weigh the positives and negatives!

[Ed O.]

Section 8 rent portions can change a few times throughout the year. There's a formula that considers the resident's income, number or dependants in the home and a few other factors (which I do not know, I suspect utilities are in there) and crank out a formula to determine if or how much of the rent split the resident is responsible for paying. When their income spikes either way, rent will adjust, not dollar for dollar, but enough for them to feel hosed.
I had a unit where the split was S8 $670, Tenant $80 and had it change to S8 $190, Tenant $560. That's a tough one for a tenant to swallow. Some tenants will have their portion change 3 times a year and others will never have theirs changed over many years. Changes are typically triggered by job and income changes.
As to it never being guaranteed, it really never is. People DO get thrown off the program for the dumbest of reasons. When they do, the rent stops and it's the LLs responsibility to get them to move, which can be a daunting task. Fortunately, I have only been through this once and it was a person with 100% paid rent that couldn't stay out of trouble. A little cash for keys and some sympathy made for a simple and fast transition.
Tenants do have a huge incentive to not get too far out of line and many don't. However, like anything else, there's some that can't seem to avoid a freight train moving at 1 mile per hour.
Another benefit is that caseworkers and support staff at the local level can assist in resolving many of the problems that do occur. This can make resolving some issues a lot easier than if they weren't there.
I'd do a ton of diligence researching crook county's eviction processes. One year is awful.
As to the point of collecting section 8's rent and not the tenants in the instance of an eviction for non payment, I suspect you would be resetting the clock every time you took payment from section 8.
If it really takes a year and the tenant is not paying, I would continue to take section 8's money and not renew the lease. By doing this, the tenant would likely move into another rental and vacate yours, thus minimizing the loss. You can also leverage the situation by telling the resident you'll have to report them to section 8 for nonpayment if they don't move. Nonpayment in some areas will (should be in all) get you thrown out of the program completely. You've also got a chance to get it around tax time when they get their refund.

Let me know if this needs any more clarification.

--Ed