Chicago Relocation

The fundamental things apply

December 26, 2009

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…So goes the song.  If you don’t know what song you can stop reading here… 

I was discussing a luxury Chicago investment property (to be used as rental) with a potential investor last week who just didn’t get it.  She kept saying — “So what will my rate of return be?  Will I make $200K in this goldcoast building in three years?  $300K? How much will I make in the first year?”

So I said “Since the stock market is anything but steady and we’re still in a difficult real estate atmosphere, and it’s awfully hard to get credit — IT’LL LIKELY BE A NEGATIVE RETURN IN 2010!  I wasn’t trying to be rude, but let’s face the facts – The appreciation party is over for a little while – at least in Chicago’s Goldcoast and Streeterville.  But the fundamentals of investment in rental property still apply. You grow rich investing in real estate by taking advantage of three (maybe four) factors: Positive cash flow; tax breaks; capital repayment; and yes — appreciation. I say “three maybe four” because you don’t always get all four each year, and sometimes you only get three in the course of your ownership.  But they are very powerful tools and it pays to look at the big picture when investing in luxury real estate for investment. 

I’ll address each of the four factors in upcoming posts.

Happy Boxing Day!



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