Any predictions on the Chicago Market in the upcoming 2019?

Question

Tom Shallcross · Answer

National Media is really bearish on Chicago and there is definitely validity to this.    - https://therealdeal.com/chicago/2018/11/30/chicago...

However these reports are at the most macro-level.  They should not be completely ignored, but they don't speak to all 200+ neighborhoods.   Although the net migration from Illinois is negative, Chicago still has 11 Fortune 500 companies in the city plus another two dozen in the surrounding burbs.  Net migration of employers coming back into the city is on a positive trend which is always good to see.

Rents are high in Cook County so a decrease in housing prices (as predicted in the article) could further strengthen cashflow positions on new purchases.  There are several pockets of the Southside I really like and I'm currently pursuing several more opportunities in Pullman.

Regardless of what the market does in 2019, you can make money in several areas of Chicago.

Bob Floss II · Answer

@Vladimir K. Rent control goes a long way towards curbing growth from the perspective of the investor. In my practice, most investors are looking to buy a building to make improvements, boost rents, and cut expenses. If you eliminate the ability to boost rents beyond the small increase allowed by rent control, you eliminate one of the biggest factors for an investor looking to create value. Why would an investor spend money to make capital improvements to a building when they won't receive a return on value?

Keep in mind opening the door to rent control allows other issues to follow. Passing a rent control law requires passing protections as part of the law so landlords cannot unfairly remove tenants and replace them with a higher paying tenant. Imagine stacking new tenant protections to prevent removal on top of the Chicago RLTO.

The concern is investors already have to overcome the RLTO, a uniquely pro-tenant law that doesn't exist in most major markets. Stacking rent control on top of it could drive away investors. We don't need it.

Kath Marie · Answer

@Farhan Khan most areas short term are fine for buy and sell as long as your numbers make sense. "What parts of Chicagoland are best for investing?" Is a very vague question. Depends on your budget, your contractors ability, your target ROI, do you want to deal with BS municipalities and heavy inspection processes, do you want newer SFR, are you ok with 100+ year old SFR, and so on. There are dozens of suburbs that are great for purchase/resale and regardless of what happens there will also be opportunities (comes down to the price).

Chicago has cranes up everywhere. Construction is ramped up. I know a few big developers and project managers for the big builders. They're not slowing down.

China trade war will (already has) continue to affect material pricing on many components of a remodel. Material cost will go up if tariffs are left as is.

Short term it's fine. Long term who knows (as can be said about every state).

Those who say chicago land is not investable due to violence is like saying Beverly Hills is a dump because of Compton. Crime exists in the bad pockets. I don't invest in the bad pockets.

We are a BIG business HUB in the Midwest.

George Skidis · Answer

Chicago's threats are the City government and their influence on the state government. Senators and Representatives from Chicago are pushing to remove the state ban on rent control. If this passes, Chicago will not be as attractive. Time for a grass roots effort.

George Skidis · Answer

Vladimir K. Section 8 would probably be exempt. The biggest drawback would be in sales. An established property with under market rents might be harder to sell because of the difficulty of raising them to the market value.

Rental prices will probably not drop in 2019. Housing prices could stagnate if rent control is approved.

Vladimir K. · Answer

IF the ban on rent control is lifted, what do you think will happen to the rent prices?  As it stands, a lot of Chicago investment properties are rented at the prices agreed upon by the Section 8.

I'm not arguing with you, just trying to understand your perspective as to what can happen.   If the Chicago prices drop in 2019, that could bring more investment opportunities provided one plans for the anticipated controlled rent price.

Thanks.

Farhan Khan · Answer

@Kath Marie Thanks for your response!  I agree Chicago got great opportunities as for doing a flip and making a profit even in the bad pockets! I was just concerned about the investing aspect of it but, you’re right who knows! we can only make predictions through market supply and demand records and any changes the future may bring! Talking about the trade war... To be honest I feel like it’s just making things worse by hurting both sides! I hope for it to end with both side agree on some kind of a settlement!

Farhan Khan · Answer

@George Skidis Thank You for your response! this is so sad as to what’s going on in Chicago and in the state of Illinois ... like soo many underwater homes which makes it harder to buy homes with a discount.. and on top of that now they’re prohibiting rent control which can cause a tremendous shortage in supply of rentals... it’ll become a huge risk factor for the landlords to rent out and easily be taken advantage of... and shortage in supply is going to be a problem for tenants too because of the lack of option in the market! So I don’t know where this is going... like it’s not going to be benefiting anyone! From your perspective what market do you think would be a perfect fit as to landlord friendly for investments that you’ll be focusing more on?

Dennis M. · Answer

i predict 7-800 people will be shot dead in Chicago next year

Any predictions on the Chicago Market in the upcoming 2019?

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