Welcome to winter!
Many northerners are looking for somewhere warm to get out of the cold, dreary, long days of winter right now. I know winter is also a great time to check out those blustery locations for what is going on the rest of the year and how they look for investment, especially in real estate.
Growing up in Detroit, I tend to associate winter wind and cold with lake effect. There is no town that matches up with that better than Chicago. After all, they have been long known as the Windy City for a reason, as they are strategically located at the southwestern most end of Lake Michigan. And, if you are talking about real estate, one of the first tenets is “Location! Location! Location!”
- Chicago is centrally located for the strategic movement of personnel and freight
- Labor unions are cornerstone in Chicago industry and commerce
- Chicago – The Windy City – the #1 U.S. corporate relocation spot
- Real estate investment opportunities in Chicago should be strong, but are not
- Workers are looking for flats and condos in Chicago, not houses
- More people are leaving Chicago than are moving to Chicago
- Baby boomers are retiring and leaving the winter, taxes, and crime in Chicago
- The City of Chicago has some of the worst debt of any major metropolitan city in the U.S.
- And it affects real estate values
- The elephant in Chicago’s financial closet is economic separation
- Education and judicial reform are critical for Chicago to rebound
- My lead gen business is a lot better investment than real estate in Chicago
- Being your own boss running your own business is possible with some work and investment
Chicago is centrally located for the strategic movement of personnel and freight
Chicago has location going for it. And relocation. More corporate headquarters are moving to Chicago than any other major city in the U.S. Location is a major reason.
Located at the crossroads of the northern half of the U.S., if you are going most anywhere, you have to go through Chicago or around it. If you are driving, you hit the famous “Loop”, passing over many of Chicago’s traditional old ethnic neighborhoods. That diversity has been a strong point for Chicago since before Mrs. O’Leary’s cow kicked over the lantern, leading to the great Chicago Revitalization Project…urrr, I mean, Fire, that leveled most the city in 1871. Just about any culture you enjoy is available somewhere in Chicago.
When flying, you likely will transfer through one of Chicago’s two very busy international airports – O’Hare, or Midway. (Midway is also one of the busiest commercial freight airports in the U.S..) Over 102 million passengers passed through O’Hare in 2017 alone, and it serves as a major junction point for many international flights.
Chicago has a massive waterfront, and is one of the busiest commercial ports on the Great Lakes – in the entire northern U.S. for that matter. So busy it has several ports that function as a regional system connecting fresh water rivers with commercial shipping across the Great Lakes and then ocean bound via the St. Lawrence Seaway.
The Chicago stockyards and rail yards are some of the largest in the nation. Cattle, hogs, and other livestock pass through Chicago, most via truck freight and rail. The railroads still have major roundhouses and union yards in Chicago, and millions of tons of freight pass through there heading east, west, north and south every year.
All those things make a great combination for manufacturing and corporate offices where people and goods have to have great access to transportation and supply chain opportunities. And the greater Chicago area has the trained labor force to handle those transportation needs. That force is largely union.
Labor unions are cornerstone in Chicago industry and commerce
Unions are the backbone of the Chicago transportation network, as well as construction, manufacturing, education, and other industries. No fewer than 62 major unions are strong and competitive there. They exercise considerable control over the strategic movement of goods into, and out of, the Chicago docks. Supply chain managers have to deal with laborers who make a high wage – plus benefits and protections – thanks to the unions. Unions have had a positive impact on safety and conditions for over 100 years, but also add to the cost of the goods and services in the area. They also make for some very complicated and at times tenuous business requirements many companies would sooner avoid.
Chicago – The Windy City – the #1 U.S. corporate relocation spot
Corporate giants including GE, ConAgra, and Archer all moved major portions of their corporate headquarters to Chicago in the past few years. Many decisions were due to the ability to move people and goods easily and at lower cost because of Chicago’s centralized location. The transportation industries in Chicago have a long history of stable, highly trained workers thanks to many years of union labor dealing with the automotive, lighting, ore, agricultural, and manufactured goods that move through the terminals and ports of the region.
Real estate investment opportunities in Chicago should be strong, but are not
With all this business moving to town, it seems like real estate investment opportunities in Chicago would abound. Chicago was hit hard during the recession like all major metropolitan areas. Chicago business seems to be bouncing back and should present strong turnkey real estate investment opportunities. Why, then, has Chicago been the only top ten major U.S. city to loose home values? According to the S&P CoreLogic Case-Schiller Indices, Chicago home values went down 2.6% last year, and have languished near the bottom of home value increases year after year. Why?
There are a lot of reasons, and some of them not so apparent. Chicago has a number of issues. Property taxes have more than doubled in ten years. The housing market is very soft. Chicago has more under water homes, i.e. more owed than they are worth, to the tune of 135,000 at EOY2017, more than NYC and LA combined. A little perspective helps to see below the surface why investing in Chicago has to be done with extreme due diligence and a large measure of luck.
Frankly, I like safer investments like my lead gen business. I do not have to count on luck for revenue.
Workers are looking for flats and condos in Chicago, not houses
While Chicago has a lot of corporate headquarters moving to town, the workers are not buying traditional real estate. It might seem like a good time to buy a home in Chicago, but problem is, many of the corporate types, used to living in an airplane seat or working 60-85 hour weeks, do not want the responsibility of a large home or property to maintain. They just do not have time. Or the money. It is not cheap to live in Chicago.
Median income is $62,848, which sounds great, until you consider that rent in one of the safer areas of Chicago runs between $1300 and $2900 for a two bedroom apartment. The cost of living is 23.4% above the national average. So if you are looking for investment property, you truly need to gravitate to neighborhoods close enough to areas of employment that renters or buyers can afford a decent place and make a decent wage.
Chicago is the 14th most expensive city to live and work in in the world
Most companies moving to Chicago are bringing staff or hiring into the area. The corporate workers moving to Chicago are opting for condos in towers or multi-family housing units, not turnkey investment properties. Nor are they buying the McMansions in Lake Shore, Highland Park or North Shore at 7 digits plus. There is no guaranteed loyalty or longevity any longer in business. You do not know when you are going to move again and have to sell, or even have a job to pay the mortgage.
That is another reason I am so keen on my lead gen business. I do not have to worry about the company selling, irate bosses, or meeting their bottom line. I meet my own.
The vast majority of jobs coming to Chicago are white collar and professional, and not located downtown
Chicago may lead the nation in corporate relocation, but those people are not the ones living in the neighborhoods where cheap property (i.e. investment real estate) can be had. The suburb of Englewood, for example, has had a nearly 75% decrease in population in two years from 2015 to 2017 due to lack of work and crime. Those houses average $20,500. White-collar folks coming to work at Archer, ConAgra and GE are not going to live in those rough neighborhoods and drive clear across town to work just to get a cheap place to live.
Traditionally ethnic neighborhoods around Chicago are emptying out, too, some rapidly. The Latino population, who moved into South Chicago heavily in the 1990’s, are leaving at a rate in excess of 10% in the first decade of the 21st century alone. Other traditional cultural areas are seeing similar negative changes.
More people are leaving Chicago than are moving to Chicago
Private real estate is lagging, badly, on resale in Chicago. Chicago was the only one of the ten most populous cities in the U.S. for both 2016 and 2017 to loose population. Why? A lot of it is due to lack of long term resale value on homes.
That means a gut of houses on the market. Locals are not getting those new corporate jobs. And people are retiring, sometime early, due to work availability going from manufacturing to corporate. So Chicagoans are leaving. By the droves.
So who are you going to sell that fixer-upper to?
Baby boomers are retiring and leaving the winter, taxes, and crime in Chicago
The largest generation in U.S. history, the baby boomers, are retiring, en masse. And they are leaving northern cities – especially Chicago – and heading for warmer climates, like Florida. Property taxes pushed by massive city debt, cost of living, and crime are three reasons.
Winter is another.
The City of Chicago has some of the worst debt of any major metropolitan city in the U.S.
And it affects real estate values
Michael Hicks, economics professor at Ball State and one of the most respected people studying Midwest economics puts it bluntly, “There’s a direct correlation in the declining demand for homes…In every region, affluent or not, demand is compounded by government that they’re doing their best to send Chicago off the rails.”
Chicago has only 9.5 billion in assets with a city debt of 42 billion according to statedatalab.org. And they have no way to pay it off. In fact, according to Kyle Gibson states in Feb 6 2018, “Chicago Ranks Second Worst of most populous U.S. cities for fiscal health”, Illinois News Network (Feb. 6, 2018),
Chicago has a debt of over 40 billion, which is $45,000 per person in the city. That is not including the $20,000 additional dollars per person it would take to cover the outstanding bills the city currently owes. And Chicago has no way to pay those bills except to push the debt out onto the taxpayers – i.e. business owners, and property holders.
There is a long history of excessive borrowing to cover city expenses to run Chicago.
There is also a long history of questionable accounting practices and management of that money.
Property taxes have more than doubled in Chicago in the past decade. A lot of that rise has been government trying to stem financial bleeding from running a town in a manner way over its ability to pay for services that notoriously stink.
And with boomers and ethnic groups leaving and property languishing, that means less money in the property and business tax coffers.
The elephant in Chicago’s financial closet is economic separation
Like many big cities, the Windy City is known for neighborhoods. Sadly, Chicago has also gained a reputation for some of the most dangerous hoods in the country. Gangs, drugs, violence, and shootings are on the news nearly daily, broadcast all over the country, about Chicago. Chicago is portrayed as having some of the highest murder rates and per-day shooting counts in the nation. People are afraid for their kids, and grandkids, in their own yards. They want out.
Admittedly, crime rate has improved to an all time low, and numbers are actually better than many metropolitan areas in the US. However, murders and shootings are up, accounting for half of the national increase in 2016.
A lot of the crime in Chicago carries the burden of its historical image, and “newsworthiness” fueled by what is controversial. Chicago has made a lot of effort to isolate and more carefully control perceptions in order to attract big business. Still, the south and west sides are kept isolated from the Loop and the downtown, lakeshore and north areas where tourist and business traffic in and out of the city are heaviest are kept under a close watch, and everyone keeps a zipped lip.
Education and judicial reform are critical for Chicago to rebound
According to June 21, 2016, Crain’s Chicago Business “16 Solutions to Chicago’s Most Vexing Problems”, 14% of the population of greater Chicago lives below the poverty line, virtually unchanged since 2012. The educational system in Chicago has many challenges, including underpaid teachers (everywhere) and lower expectation for quality in the classroom than many areas. There is little collaboration between schools anywhere in the district. This creates challenges in graduating qualified people to become the new workers to fill home town jobs.
Those issues, along with badly needed court reforms, are big stumbling blocks in an area where nearly universal business S.O.P. is refusing to hire convicted felons. With one of the highest perceived crime rates in the country, that is gasoline on a bonfire to keep entrepreneurial ventures out.
I don’t know about you, but this does not sound like fertile ground for my investment dollar. Why would I take the risks of this city situation when I am consistently making 80-90% profit on my lead gen sites?
Least of all, winter…
As trivial as it might sound, potholes are a big issue in Chicago.
Cursing the damage to your car is a reality in a city that does not have the fiscal where-with-all to fix the darn things. Another challenge is run-off and industrial pollution, both magnified in the winter-to-summer annual transition as salt and chemicals drain into nearby rivers, canals, and Lake Michigan. Clean water regeneration, invasive species brought into the ports that threaten commercial and recreational fishing, air pollution, and disposal of toxic waste are all big, serious local health and economic issues.
But winter presents other financial barriers.
Chicago does not have a market for vacation buyers or international real estate investors, and weather has a lot to do with it. Do you want to go “enjoy” Lake Michigan when there is a 50 below wind chill? Not me. I would rather be kicked back with a customary cool beverage of choice under a palm tree somewhere, laptop in hand, working on my lead gen properties.
Given all these factors, is no wonder, seeking warmer climates and wanting to snag a retirement home before prices in those areas go up even more, that baby boomers are leaving and heading south.
My lead gen business is a lot better investment than real estate in Chicago
Lead generation properties act a lot like real estate, except they are virtual. What I mean is, when I write a website to bring in business for a client, increasing their bottom line, I own that digital site. And I get paid every month. Well. Really well in some cases. And they are glad to pay me.
When I graduated from college and took the “normal” $35K j-o-b working for big corporate America, I was miserable. I knew I would not last unless I got out. So I started to look for an escape route.
I investigated every imaginable way to make money on line, since my background was in computers. MLM’s, while some were sort of ok, were a pain, and most died painful, expensive deaths. My friends and family had started avoiding me. (Now I have really cool friends who make as much or more than I do that hang out with me.)
Next I tried Amazon and other avenues to resell products, drop ship, you name it, I tried it. I was working crazy hours, making some decent money, but was exhausted and had no life. That was not why I went to college and sure not what I wanted in my life. So I kept looking. Then I discovered Dan and the lead gen business coaching program he put together.
I signed up for Dan’s training on how to help businesses grow, legitimately, ethically, and I never, ever, looked back. You won’t either if you decide to give it a chance. Check out how at https://www.bestrealestatedirectory.com/lead-gen/ .
Yes, I worked for a while and did both businesses – my job and my lead gen business. Was it hard? At times, yes, but most things worth having take some effort. I worked a 40 hr week and worked as much as I could at getting my business up and running. It did not take long until I not only had cash coming in every month, but my business was growing and I was getting referrals to other businesses that needed my services. Word of mouth from happy customers is the best free advertising you can get!
See, there is a really massive number of businesses that need more customers.
Something like 2.4 million small businesses that can use more business just in the U.S. That is a lot of potential customers. And every day more people go into business for themselves. Have you dreamed about it? Now is your chance. It does not cost you even a dime to listen. And I want you to ask questions. Anything you want to know. We will give you a straight answer, or find someone who can.
Dan showed me how to get my life back, be my own boss, and make money. And the best part, I was in control. I could work as hard as I wanted and actually see something for my hard work. I learned from my own mistakes. And I got to kiss the j-o-b goodbye in five months.
Yes. You read that right.
I really like the feeling of doing things to help clients prosper in their businesses, reasonably. Because when they prosper, I prosper. It is not just about the money, either. It is about doing something good for both of us in a positive way. And getting to work a short work week, travel just about anywhere I want, and doing cool things with friends does not hurt.
This is just one of the sites I put up for a customer –
I put maybe six hours into the site, one of the first I did. I get paid by automatic deposit every month, and have for four years at $750 per month. After expenses, because all legitimate businesses have expenses, I have made $32,400 the last four years off six hours of work and literally not had to touch the site again. Pretty great return on investment, huh?
Being your own boss running your own business is possible with some work and investment
Would you like to kiss your j-o-b goodbye investing in yourself instead of someone else’s profit share? Go visit this link to find out about our training program https://www.bestrealestatedirectory.com/lead-gen/ .
At 29 I have some disposable income to invest from my six figure income. That is why I looked at the Chicago investment real estate market. My lead gen business is a whole lot safer, surer, and less stress. I work when I want to. I play when I want to. And I do not shovel snow when I do not want to any more.
Check us out. There is no obligation and it does not take a lot of time. I can hook you up with a live person to get any questions you might have answered.
I knew I could not keep going in, day in and day out, to a job I hated. I had to do something for me.