By Daniel Mantis
Lake County… I get it. The real estate taxes are high. That’s the singular thing that any investor brings up when I suggest the idea of looking at apartment buildings in Lake County. While I get why that’s intimidating to investors, I don’t think that should disqualify investors from considering investments. Here’s the bright side:
Returns are better: When I was first starting out in Chicago real estate I was introduced to the idea that you don’t make money from the cash flow of a building, you make money on your refinance. That’s never been truer than right now. People are buying multifamily properties at ridiculously low cap rates, on the hope that there will be appreciation. As you move out of the city proper and into the suburbs and tertiary markets, however, returns increase significantly. An investor can buy buildings in stable markets in Lake County for an 8%+ cap rate, and while they may not see the equity pop like the city investors hope to see, the property will put money in their pocket every month.
Rents: With rents in Chicago at an all-time high, tenants need to seek more affordable housing by moving further from the city center. Because of the increase in demand for product in Lake County, rents are also up.
Tax Stability: As I mentioned, real estate taxes tend to be higher in Lake County than they do in Cook County, and while having a higher expense is never ideal I would contend that in this case, it’s almost preferable. Cook County is underfunded, which means for too long taxes have been kept too low. While I don’t know if this suggests a certain property tax hike in Cook County, what I’m saying is that there is value in stability and that volatility introduces unwelcomed risk into your investment.
For these reasons, I would in invest in Lake County. If you’re interested in exploring Lake County, let’s connect.