Anyone else concerned about the illinois budget standoff? (Chicago, Detroit: sales, 2013)

[Fighting Fungus]

Originally Posted by dtcbnd03

Detroit is one city. This includes ALLLL of Illinois. I agree Chicago will be fine but Detroit saw housing prices collapse and even started to tear down vacant homes. That's what worries me as a real estate investor. If I simply worked a 9-5 in Chicago I wouldn't care at all. I'd still have my job or simply move to another state. But when your assets are in Illinois it's worrisome.

I agree with this I own a home, and a few other properties and I am also concerned about this, that being said if Illinois goes bankrupt it will probably be a good time to invest in properties.

[dtcbnd03]

Originally Posted by Fighting Fungus

I agree with this I own a home, and a few other properties and I am also concerned about this, that being said if Illinois goes bankrupt it will probably be a good time to invest in properties.

Very true. Can't time the market but you can always buy the dip!

[MSchemist80]

Yes I am very concerned that we have a govt that serves itself and not the people and has become a serious quality of life problem that they are allowed to tax people out of their homes. I've declared the entire Democratic party dead to me as a result and refuse to buy a house in Illinois. I am looking to live frugally here accumulate wealth, then get the h#ll out of here when I retire.

Of course it is possible that Illinois eventually is able to file bankuptcy, switch to a 401k system for public employees, strip the unions of their excess power where they can essentially name their own price for salaries and benefits because the govt can't and won't say no and becomes sustainable. I just am not that optimistic. This state is rotten to the core.

[pvande55]

Originally Posted by Fighting Fungus

I agree with this I own a home, and a few other properties and I am also concerned about this, that being said if Illinois goes bankrupt it will probably be a good time to invest in properties.

A contrarian philosophy, to be sure. But more than a few have gotten rich going against the crowd.

[JJski]

I lived thru the Detroit fiasco in MI… We owned in a ultra-desirable burb hyper pinpoint core location (Equiv to a Hinsdale/Western Springs/La Grange here) during that precedent setting municipal fiasco… My opinion is if you are in the right areas you are safe but they are expensive --- There definitely will be great opportunities for investors to capture properties at deep DEEP discounts if Chicago goes bankrupt. Trying to do this now (outside of bankruptcy for investment purposes) is like catching a falling knife. Extremely challenging yet possible for some lucky ones. Both our West coast and east coast equivalents will tell you it is still cheap to buy in Chicago…

So will We go bankrupt? Who knows – if yes life will go on (it will present historic opportunities) and Chicago will still have a very bright future with a fresh start (and with better democratic and republican leaders like what happen in Detroit) is all I am saying…

Cheer up! You live in one of few greatest, globally recognized destination cities of the world – It will only continue to get better long term… Eventually better leadership will come - city will survive and thrive...

[MSchemist80]

The problem is this isn't just one city government that is facing bankruptcy. The state itself, the city govt, countless school districts, townships, municipalities and other assorted governing units are all in variably bad fiscal condition due to the insane pensions promised and never funded and overall inefficiency causing stress on taxpayers leading to people and businesses to flee and retarding economic development causing further stress on everyone. It is just a disgraceful and unbelievably bad mess.

[IrishIllini]

Originally Posted by aga412

And aren't the corporate relocations also just more tax breaks for the company that ultimately get paid off by Illinois residents? The relocations aren't due to any positive tax reform or anything like that, it's just the city flaunting money at companies to get them to relocate here while we foot the bill.

Chicago hasn't offered tax breaks to any of the companies that have moved in recently. I know the suburbs will try to undermine each other with tax breaks.

[MSchemist80]

I read that Cook Co had to give a significant property tax break in order to get that big commercial complex built near I-294 and Wolf Rd by Ohare. Otherwise noone would build given their insane property taxes.

[chet everett]

Originally Posted by MSchemist80

The problem is this isn't just one city government that is facing bankruptcy. The state itself, the city govt, countless school districts, townships, municipalities and other assorted governing units are all in variably bad fiscal condition due to the insane pensions promised and never funded and overall inefficiency causing stress on taxpayers leading to people and businesses to flee and retarding economic development causing further stress on everyone. It is just a disgraceful and unbelievably bad mess.

I had lunch this weekend with a long time friend who still works in part of the financial field that is crucial to governmental finance. We got around to the topic of Illinois and he mentioned that a few weeks ago he was at a major conference of similar professionals. One of the featured speakers was someone with a household name in high finance. During q & a that speaker was answering questions about various scenarios and the speaker said of Illinois / Chicago: "two words -- Train Wreck". It was obvious to the whole room of finance professionals that the speaker, who literally had a major place at the table as the Federal Reserve put together emergency meetings to deal with the global financial crisis of 2008, had zero confidence that there is any way to resolve the Illinois debt situation. That is a huge negative...

My friend further went on to say that he knows of several firms actively soliciting those currently receiving large pensions from Illinois to band together for eventual messy legal fights as well as potential make-good payments on structured settlements. Things are going to go from "eh" to "OMG" in the blink of eye... https://www.sec.gov/files/ib_income_streams.pdf

The thing is, as more of the "investor class" realizes that Illinois stubborn insiders are not going to follow the advice of a proven finance guy like Rauner there will be higher and higher premiums asked for every dollar Illinois needs to borrow and eventually the costs of interest will be result in a chaotic failure...

[MSchemist80]

Indeed I was looking at possibly adding Vanguard High Yield Municipal Bond fund to my taxable portfolio and then I saw major holding Chicago Board of Education and decided god no. You'd have to be very brave to consider buying Illinois bonds but I'd feel more comfortable in the stock market. At some point no amount of high interest will attract investors.