Real estate investing - Chicago is the place to be

Are You On the Fence About Investing In Chicago Real Estate? It’s Time to Jump Off:-


Investors choose real estate for two reasons
:
1)    They know real estate. They know how to read markets, spot a good deal, acquire and market properties.
2)    They realize that investing in real estate routinely beats all other forms of investing as far as return on investment, and it normally always beats inflation.

 

The second reason has never been truer than in the past few years. While other low-risk investments struggle, real estate investments continue to offer high returns.

The CCIM Institute recently released their Q1 2013 report (1), and all indications point to a strong commercial real estate investment market – especially in the Chicago area. Economic indicators point to a strong rest of 2013 and 2014 for real estate investment. A recovering economy, lower vacancy rates, rising rents and banks relaxing their lending policies are all signs that the time to invest in Chicago real estate is now.

How Things Stand Now

Since 2010, the economy has added 5.5 million new payroll jobs, and the net absorption rate has risen. Rents are rising due to a rising absorption rate and little new construction
Investment yields on comparatively safe assets such as t-bonds and security deposits are exceptionally low due to low interest rates. This has led to an increase in commercial investment, and higher prices and lower cap rates for investment properties reflect this increase.

Rent increases have outpaced consumer price inflationby a margin of 2.7 to 1.6 percent.

Capital for business investment is scarce, but banks’ capital ratios are higher than the recent 20-year average. This is likely due to uncertainty with the implementation of Dodd-Frank.

What to Expect in 2013-2014

The economy will continue to add jobs, and individuals and companies will need a place to live and do business. Investors can expect vacancy rates to continue to fall and rents to rise over the coming years.
While barriers to real estate investment are still comparatively low, prices for commercial properties are set to rise in the near future.  Ideally, banks will once again begin to loan capital to developers, but the effect on the number of units available is not immediate. Prices will continue to rise while inventory catches up with demand.

Rents will continue to increase over the coming months and years.
As Dodd-Frank is implemented, banks will be more likely to loan capital to new firms and stimulate the economy. This new infusion of cash in the marketplace will see a boom in office, retail and industrial properties.

What That Means to You

Chicago is hot for real estate investingSimply put, the data indicates that you should move now. Vacancy rates will drop and rents will rise. Startups cannot get the capital to build their own offices, and so, they will be looking for office buildings to rent. The unemployment rate will drop over the next few years while housing starts stay down. That means more people will need to rent an apartment or home rather than buy one. This all bodes well for real estate investors willing to invest now while interest rates are still artificially low. Once the economy fully recovers, the days of zero interest rates are over.

Chicago, with its well-educated and industrious population, is primed to be a leading force in the recovery, and as a real-estate investor, you should make sure you are ready take advantage of a recovering economy.

by, Jonathan Williams: EquityBuild News Contributor

Sources (1)
http://www.ccim.com/resources/qmt-first-quarter-2013-quarterly-market-trends