In Cook County, Illinois, homeowners are not enjoying the same type of housing recovery experienced by most of the rest of the nation. In fact, not only have home values not recovered to their pre-bust levels, but the “silver lining” of lower property taxes is not shining through in the Chicago area. This is because Cook County property tax bills have risen, on average, by 22 percent after adjusting for inflation. When property tax bills went out on August 1, 2019, homeowners were dismayed by the tally of taxes owed.
According to the Illinois Policy Institute, Cook County, in particular, has a decline in home values that is 500 percent worse than the nation as a whole experienced during the last housing crash. Analysts for the group blamed “unsustainable growth in pension costs for government workers” for the rise in property taxes but did not address the cause of the faltering local real estate recovery. To be fair, the area is only 5 percent below peak pre-recession values at this point, so the bigger issue is certainly the tax angle. As pension liabilities rise with more workers retiring, the state may have few choices other than to continue to hike property taxes.
Homebuyers are Opting to Buy Elsewhere
State representative Patrick Windhorst is warning the trend could cause a mass exodus from the state. “High property taxes in southern Illinois cause homeowners and potential employees to look to places like Missouri and Kentucky for more affordable property taxes,” he warned. Windhorst encouraged his constituents to “sound off on their opinion of an issue that sometimes prices folks out of their homes or keeps families from purchasing a home in the first place.”
Why Illinois is Great for Tax Lien Investors
An interesting side effect of the growing unrest surrounding the unsustainable behavior of the Illinois government and certain counties, like Cook, in particular, is that Illinois is becoming increasing friendly to property tax lien and tax deed investors. After all, the municipal governments are getting desperate to get those taxes paid and, while you might think a mass departure from the area is bad news for investors, the truth is that buying properties at the deep discounts common at tax auctions actually enables you to improve the affordability situation in the area even after you generate an extremely healthy return.
In today’s real estate market, many tax lien and tax deed investors have begun leveraging this financial flexibility to flip their properties instead of holding them long-term. For example, this past May, PIP Group managed a project where the total investment, from purchase to rehab to sale, was less than $95,000 and the annualized return was more than 20 percent. This could only have happened on this type of high-quality fix-and-flip deal if the initial acquisition happened at a tax sale.
You can learn more about that specific deal and about how PIP Group investors are able to actively or passively invest using nearly any strategy they like while leveraging the power of tax liens and tax deeds by visiting PIPGroup.com. Do not restrict your real estate investing activities because you think the markets are “too hot” to compete right now. Tax lien and tax dee investors work everywhere!
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