As local realtors, we get no end of questions about how much it really costs to live in the suburbs. There’s nobody better placed to answer that question for you, so we’ve pulled together everything we know about living expenses here in Chicagoland. 

We’ve made sure to include expensive, affordable, and mid-range suburbs, as well as picking areas from the North, West, and South of Chicago. As if that wasn’t enough, we’ve also included averages for the collar counties. Read on to find out which areas of Chicago could suit your way of life. 

Average House Prices 

One cost of living that’s non-negotiable is having a roof over your head – so let’s start by looking at the average house and rent prices across different Chicago suburbs and Counties. 

Median House Prices By Chicago Suburb

As you can see from the suburbs we’ve chosen, house prices across Chicagoland vary drastically by suburb. At the affordable end of the spectrum, you’ve got villages on the south side of the city like Thornton, Illinois, where the median house price is a mere $160K – almost three times less than the Chicago average.

But don’t be fooled into thinking all the suburbs are a haven for cheap property. At the other end of the market, you’ll find upscale suburbs like Hinsdale and Barrington Hills, where the average home costs a mindblowing $900K+.

There is no shortage of high-end neighborhoods around Chicago, so if ever you fancy curb-crawling for your dream lottery home, take a drive around places like Hinsdale, Glencoe, Winnetka, Clarendon Hills, and Wilmette. 

On the other hand, a city like Evanston, located on the north shore of Chicago, comes in at a happy medium of $362K, which isn’t far off the average home price here. 

Yet, the truth is that you can find homes across different price points in practically any suburb. There is a huge variation in size and style that affects the final value of the home.

Average House Prices By Chicago County

This much is clear when you look at the average house price by Chicago County. The figures are much closer together, reflecting the fact that you can find expensive and affordable houses spread across every area. 

All in all, the Chicago County Average house prices reflect that you can find properties close to the Chicago average house price, no matter what side of town you’re looking into. 

Average Rent 

Much like the house prices, the average rent in the Chicago Suburbs really varies depending on where you’re looking. Your jaw may drop as you look at the average rent in Barrington Hills as you ask yourself why it’s so expensive.

That’s because Barrington Hills is a rural suburb of Chicago. It’s miles out from the city itself, and most people here tend to own their homes. So any rentals in areas like this tend to be luxury properties designed for short to mid-term escapes to the countryside. 

Median Rent By Chicago Suburb

In general, rental prices in the Chicago suburbs come in between $1,000 -$2,000 for a 1-bedroom apartment. It’s the most significant expense you’ll need to account for when working out the cost of living in the suburbs.

However, it’s helpful to note that a 2- or 3-bedroom apartment or home would cost far less to split between multiple renters – which is how many people choose to get around the high cost of living these days. 

Median Rent By Chicago County

Data from deptofnumbers.com

Property Taxes 

Regarding the cost of living in the Chicago suburbs, property taxes are the elephant in the room. Many people today might blacklist Illinois as a place to live because our property taxes are famously higher than the national average. 

On the flip side, you could consider it part of the deal to live close by to one of the best cities in America, which is home to nationally ranked schools and a cultural scene with a long legacy of producing world-class professionals across every vocation. 

Regardless of how you see it, the property tax bill will come your way. Let’s take a closer look at how that cost varies across different Chicago suburbs. 

Property Taxes by Chicago Suburb (examples)

Data from smartasset.com/ 

It’s a little tricky to figure out how much property tax you will pay until you’ve chosen a home – a lot depends on the exact area the home is in, as well as the home’s assessed value. But you can see that, once again, property taxes range wildly between different suburbs, and in general, they follow the pattern of how expensive the suburb is. 

In Thorton, which is one of the most affordable suburbs of Chicago, homeowners here pay an average property tax bill of $3,699. This sounds quite appealing compared to the record-breaking Hinsdale, where the locals are shelling out an average of $12,389 in property taxes.

 “Where does it all go?”, you might wonder. The answer is that much of it funds one of the most prestigious school districts in the state of Illinois, Hinsdale Township High School District 86. The situation in Naperville is much the same, and that’s why families who can afford it are flocking to these suburbs despite the high taxes. 

To get a more general picture of how property taxes vary across Chicagoland, we can also consider the property taxes by Chicago County.

Cook County is onto a winner here, with the lowest average effective property tax rate of 1.38%. Cook County and DuPage County are both home to some of our personal favorite suburbs, including Downers Grove, Glen Ellyn, Elmhurst, Wheaton, Oak Brook, Schaumburg, Skokie, Arlington Heights, and Evanston. 

Property Taxes by Chicago County 

Data from tax-rates.org/

Median Household Income 

One good way to get an idea of the cost of living in an area is to look at the median household income. People generally like to live in the best area that they can afford – and if they have a similar income to you, then you can look to that area too.

As you might expect, based on the rent and house prices, Barrington Hills, Hinsdale and Naperville are the highest earners from our example suburbs.

In fact, they earn 2-3 x more than households living in Thornton and Northlake. So, in general, you can expect the cost of living is 2-3x times higher, depending on your specific lifestyle. 

Median Household Income by Chicago Suburb 

Data from niche.com

Transportation 

Getting around in the Chicago suburbs contributes a lot to your cost of living, and the way that you travel will depend on where you live. 

There are some far-out suburbs, like Barrington Hills, where having a car is an absolute necessity simply due to the scale of the local area (and the fact that there is no nearby metro station). You’ll need a car to do simple things like picking up groceries because public transport doesn’t support it.

However, if you are lucky to live centrally within a well-connected suburb like Naperville or Evanston, you could get around by relying on the metra and pace buses. No matter which suburb you live in, you can get a day pass or a monthly pass for the Metra. The cost does change slightly depending on your route and distance from Chicago. 

Metra Pass

Daily Cost of Commuting to Chicago from Suburbs by Car 

*Based on 2022 current average price for regular gas of $4.541 and the average MPG of 25

** Based on commuting 21 days per month 

Many people in the Chicago suburbs choose to drive as their main method of getting around. Just like most places in America, there is a lot of sprawl in our suburbs and there is nothing more convenient than hopping in your car.

However, it also comes at a cost – and one that is rapidly rising. Fuel prices are almost double what they were this time last year, and there’s no telling how they might change in the future. 

We’ve made some quick calculations to estimate how much it would cost you to commute to Chicago every day from different suburbs. We did this using current gas prices and the average miles per gallon of 25 – plus. We also considered that you’d be commuting approximately 21 days per month. However, no matter what suburb you live in, you can easily calculate it yourself.

To work out how much it will cost you in fuel to travel by car, find out your miles and then divide it by your MPG. Take that figure and multiply it by the current cost of fuel per gallon, and the result is your fuel costs for the trip. 

Bear in mind that being stuck in traffic uses up to ½ gallon of fuel per hour. Many of the Chicago suburbs are known for becoming congested.

If you’re commuting every day from a busy suburb into downtown Chicago, you’ll easily spend a couple of extra hours a week sitting in the car. To add insult to injury, this can add on a few dollars to your fuel costs weekly. 

Parking

On average, people in Chicago pay $190 per month for parking as part of their commute. 

If you are parking every day for your commute – whether that’s to Chicago or simply to your local metra – you’ll want to do some research to figure out the cost of your local garage and account for that in your cost of living. 

Parking downtown outside of Chicago is typically metered at $2 per hour. The cost of parking in a garage varies dramatically depending on their individual rates, so you’ll need to do some research to find the best spot for you. 

Utilities 

No matter which suburb you’re looking at, utilities will be roughly the same, as many of them are determined by state or national providers. One of the biggest differences you can make to your cost of utilities is what phone bill and WiFi you choose. The cheapest phone tariffs for U.S. providers start at $30 but can be as high as $180. 

Food prices / Eating out

It’s hard to put an exact figure on the cost of food in the Chicago Suburbs – that’s because it doesn’t really depend on the suburb so much as the person’s individual lifestyle.

According to bungalow.com, people in Chicago spend around $300 every month on food. But we all know that the way you choose to have your meals can make or break that figure; if you shop at budget supermarkets, do meal prep and always eat at home, then your food bill will be significantly lower than someone who lives off takeaways or in upscale restaurants. 

But still, just for fun, we thought we’d head out to a few typical suburban restaurants so we could show you roughly how much it costs to eat out in the suburbs. We ate at an in-expensive restaurant and a mid-range restaurant – here’s how much it cost. 

Inexpensive restaurant: $60-150 (couple)

Mid-range restaurant: $180-$330 (couple)

In short 

We hope to have given you a good insight into how the Chicago suburb you call home can affect your cost of living. Of course, there are many other factors to add to that final bill, such as childcare costs, healthcare insurance, and car insurance, but these are broadly speaking the same no matter where you live. 

Perhaps you’ve even set your sights on one of the suburbs we’ve used as examples. We’ve got lots of helpful information for you about living in Naperville, the best parts of life in Hinsdale, and why we think Northlake is one of the most underrated suburbs of Chicago. 

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What is the best investment to make? Is it stocks, bonds, or mutual funds? The answer might surprise you. Real estate has been one of the most proven investments throughout history.  It’s not much of a surprise; many know of someone that got wealthy investing in real estate. The majority believe investing in real estate is a good idea, but most don’t believe they have the money to start or know where to start. 

It’s why I decided to write this blog. In real estate, you must be creative, creative strategies can double, triple, or quadruple your return. That is why I wanted to share three easy proven methods to start investing in real estate with little money or knowledge. By being creative, you can start investing in real estate passively and with minimal effort.

Strategy # 1- House Hacking

House hacking is a term coined by the famous real estate investing website biggerpockets.com. If you haven’t heard of the website, make sure you check it out, they have a great forum with many active investors that share knowledge and ideas. I first heard this term on one of their podcasts by Brandon Turner. The strategy has been around for hundreds of years, but it finally has a name.

The house hacking method simply means renting out parts of your house to generate income and offset some of your mortgage and costs. Of course, you could have roommates that share your expenses in a single-family home; however, I have often seen this strategy implemented on a multi-family property with two or more units.

You are required to live in one of the units but, this strategy allows you to obtain ownership rights to a multi-unit for a minimal downpayment. Financial institutions consider five or more unit buildings as commercial, but you could buy a residential 4 unit for as little as 3% down. Compare this with a 20-25% downpayment that would be required if you are an investor owner.

Purchasing a home that you could house hack provides income that you could use to pay for, living expenses, mortgage, home improvements, or help fund your next deal. The property will also appreciate in value while your tenants help you pay down your principal.

Strategy #2- Live- In- Flip

Live in flipping is an old strategy that has been around for hundreds of years but again, never had a name until the internet. The strategy simply is like it sounds buy and live in the home while you flip it. This strategy is ideal for all the DIY’ers and handyman that don’t mind getting their hands dirty.  

Most home buyers are looking for move-in ready housing, but the move-in house comes at a cost. If you have great taste, a vision, and are ready to roll up your sleeves, this strategy could net you huge returns, and be tax-free.

If you are ok with a little dust this strategy could net you great gains with very little money down, vs a traditional house flip.

I would recommend using a real estate agent that is familiar with flipping or is an investor themselves. They could point out great homes that need a little TLC and could resale for great gains.

When you are live-in-flipping you must keep these two things in mind, 

1. You are improving the home to what the market desires, not your taste or design. 
2. Understand your limitations. Learn when to hire and when you can DIY. A poorly rehabilitated home can show up in home inspection and could cause thousands of dollars after repairs

Strategy # 3- Simply buy a house

In real estate, you must be creative, and this is why I wanted to introduce the last strategy. If you are not up for flipping or hacking your own home but want some hands-on investing in real estate then simply buying a house may work best for you.

Now I know that most people wouldn’t consider this a strategy or creative but simply putting your name on a deed could start you off in your investment career. The largest expense in most households is housing. By purchasing your own, you could be living rent and mortgage-free in as little as 15 years. Think about how much money you could save if you didn’t have you pay your rent or mortgage.

Having a free and clear home also provides you with the ability to borrow against the home. Having a line of credit of $300K-$400K would be a great start to your home flipping or investment career. Plus, it’s as easy and passive of a strategy as it gets.

Your first home could also provide you with the needed funds to purchase your second home and forever home. Most homeowners don’t start to buy buying them forever home. They simply buy what they can afford then sell and use the proceeds to purchase their second larger home and so on.

Conclusion

Real estate has been an important part of the US economy and growth. The United States government promotes homeownership because its provided wealth for all Americans alike. By using a government-backed loan, you could start investing in real estate for as little as 3% down. The tax law also allows you to realize a capital gain of up to $500k tax-free. Think about how favorable these terms are, where else can you realize a gain of up to $500k without uncle sam dipping in your pocket? 

These have been 3 easy strategies to start investing in real estate, There are many ways to start investing and even some that require no money down. It’s often the headline that attracts many people to those strategies but those strategies require marketing, selling, and negotiating.  These strategies on the contrary require very little knowledge or money.

Using the right realtor to help you find the perfect match is also crucial in a successful investment. The realtor can use data and sold history to determine the purchase price, estimate repairs, expected rental income, capital expenditures, and estimate returns.

If you are in the Chicagoland area and would like the help of realtors that are also investors please reach out, email, call, or text.

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You have visited every open house for months; you have every push notification on to make sure you do not miss any of the new homes that come on the market, and then, you see it, the perfect home, the house that you have been picturing. It is perfect! Now what?

You have invested all this time looking for the right home and found the right house. You must have it. It is perfect! Now the only thing you need to do is convince the seller to sell it to you. You love the house and plan on making a reasonable offer. Of course, you do not want to lowball the seller and lose the house. But you do not want to look foolish or let your emotions get the best of you and end up overpaying for the house, either! What should you do?

Making an offer on your first home is a big deal. As an Illinois realtor, I have seen the good, the bad, and the ugly when it comes to making offers. I want to share my tips for making sure you are successful when finding the right home. We will cover how much to offer, what contingencies are important, what earnest money is, negotiating strategy, and more! This will better guarantee success in making an offer on your dream home.

How Much Should I Offer?

The first step in making an offer is determining what the house and land are worth.

The value of the residential real estate is determined by the comparable sales analysis method. This method is used by both real estate agents and real estate appraisers to determine what a home is worth. The comparable analysis method compares the price of the home you are trying to buy with other similar recently sold homes in that area. Comparing other sales with similar features such as layouts, beds, and baths will give you are a better understanding of what others are paying for a home similar to yours.

Determining the value of a home is not a science; it is more of an art. The target is always moving and does not include any homes that are pending or under contract. Therefore, value is subjective, so you will likely get many different answers from many qualified advisors.

So the question you should ask is, ‘What is it worth to you?”

In real estate, nothing is perfectly equal. Everyone’s home is unique.

When you find a home you are looking to buy, ask your realtor for a comparable sales analysis. Your realtor will be able to bring up the most recent homes that have sold. Review the comparable properties and sales price with the home you are trying to buy. Ask your realtor for input and suggestions on how to assess recent sales properly.

Real estate is not supposed to be emotional, but it always is. And it is normal. A house becomes a home, where you share moments and memories with the ones you love. Make an educated guess on the value of the home with the help of your realtor.

Quick Tip: If the home has multiple offers or it is in a hot market, making a full asking price offer or even higher than asking is recommended and often necessary to get your offer accepted. Listen to your realtor’s input.

What Are Contingencies?

Contingencies are a common occurrence in real estate transactions. They simply mean the sale and purchase of a house will only happen if certain other conditions are met. There can be many different contingencies in a real estate transaction, but the two most common are an inspection contingency and mortgage contingency.

Adding these two contingencies basically means that you agree to purchase the house as long the home inspection satisfies your liking, and second, that the bank appraises the home for what you promised the seller to purchase it for.

Contingencies are great ways to protect you during the purchase process and will allow you to feel confident giving you a due diligence period.

What is a Due Diligence Period?

Due diligence period usually refers to the time after signing a contract that the buyer has to inspect the property and make a decision whether they want to buy the property or cancel the purchase or go forward with the transaction.

In an extremely hot market like we are experiencing today, waiving some or all of your contingencies makes you a much stronger buyer. However, I do not recommend purchasing a home without an inspection report. Waving the inspection contingency is only for those buyers with a wealth of experience. Not for first-time home buyers. Also, in order to wave the mortgage contingency, your offer will need to be an all-cash offer.

What is Earnest Money?

Earnest money is a deposit that shows the buyer is serious about purchasing a property. Earnest money deposits are not refundable and are usually applied towards the purchase or closing costs and down payment requirements.

Earnest Money:

The earnest money is held in an escrow account and is not refundable to the buyer.

The amount of earnest money varies depending on location, market conditions, and what you are using it for but should be between one to two percent of the sales price. Higher than normal earnest money deposits can show a seller that you, as the buyer, have sufficient funds in their bank and are very serious about the purchase.

Quick Tip: Use earnest money as part of the negotiation. Ask your realtor for suggestions and recommendations. Make a decision you feel comfortable making.

Writing the offer

Every real estate contract is a little different and varies from location to location, but almost all real estate contracts have the same common information.

The contract should cover a few things, including:

• The address of the home you are buying
• The amount of your offer
• The earnest amount and when you are going to deliver it
• Any and all seller concessions that you are requesting from the seller
• Any contingencies that you are putting into place
• The type of loan that you are going to have
• The date that you plan to close on the property
• The date that you want to have possession of the property

Most real estate agents already have a general contract from their local realtor associations for you to use. These contracts are usually over 10 pages long. You will want to ask your agent for a copy of the contract so that you can review it ahead of time. You should also be sure to ask any questions if there is something you do not understand about the contract they give you. You do not want to be blind-sighted by anything on signing day or afterward.

In Illinois, sellers are required to fill out something called a property disclosure report. This kind of report is done in order to let the seller disclose all of the defects that he or she knows about the property. The disclosure report includes where there has been any flooding, roof leaks, and any other known material defects that may or may not be a concern to the buyer. You will include a signed disclosure agreement with your offer. Including the signed disclosure agreement means that you understand the condition of the property based on what has been disclosed to you.

The buyer will want to see if the roof needs replacing or whether there have been water leaks. They may also check for termites, foundation problems, or electrical issues. You should not expect an inspection report when reviewing the disclosure report, as that is what an inspection is for. A disclosure report is simply what the owner already knows about.

Getting Your to Offer Accepted

There are many different factors that determine whether or not your offer gets accepted or declined. I wish I could tell you that there was one way that always got the job done and guaranteed you would get the property, but there is not. The best piece of advice I can give you is to listen to your trusted advisors—the people that are currently buying and selling houses in the area you wish to purchase.

The first offer is always going to be the best one, so you should make sure you have everything lined up before you make an offer on a house. It should not matter if you are offering above or below the asking price. Sellers what to feel secure in the fact that you are serious and are able to follow through with your agreement. Βecause of this, you should provide the seller with a copy of your pre-approval letter. Do not send an offer to a seller without a pre-approval letter. No experienced seller or seller agent will take any offer seriously without a pre-approval letter.

Quick Tip: You should have your lender call the listing agent to introduce themselves. This will give the listing agent the opportunity to ask any questions should they have any. Lenders can provide a vote of confidence that you are able to purchase that home which will help boost your chances of getting the house.

Negotiation

The key to every successful negotiation is having everyone involved feel like they both gave and took and therefore will able to find a happy medium. Historically on average, homes are sold anywhere from 95 to 98% of the original asking price. This is most likely the case because almost every buyer wants to feel as if they had some negotiation power and therefore were able to drop the price at least a smidge.

The path you take in the negotiations will depend on a variety of factors. First, it is important to understand the current market and have as much information on the home you are interested in and its listing agent as possible. Understanding your position, your strength, and your weaknesses will help you develop a plan with your realtor to agree on terms with the seller.

When negotiating the terms and the price of your new home, you want to make sure that you make data-driven decisions. Your realtor will be able to provide all of the data and information that you need to make the best decision possible.

When negotiating, I like to follow the advice of two master negotiators. The first is Chris Voss. Chris is a retired master FBI hostage negotiator. The best advice that shocked me from his teachings was that ruthless negotiators usually do not end up getting their way. Instead, great negotiation is all about great collaboration. You are never going bend someone’s arm to get them to sell you their home. Instead, listen and see what the seller wants from you and adjust what you are asking for accordingly.

The second negotiation advice comes from Compass CEO Robert Reffkin. Robert teaches moving fast to submit an offer and then negotiating slow. Robert recommends moving slow when negotiating in order to avoid showing eager enthusiasm as a buyer. This is similar to having a poker face when negotiating.

At the end of the day, negotiating is not about winning or losing; it is about creating a win-win situation in every party’s eyes. Please consult with your realtor and consider his or her recommendations. Realtors have dealt with many home purchase negotiations and they understand the current market conditions.

Conclusion

I wish I could tell you that all negotiations turn out successful, but that would not be true. I hope what we have covered today will help you through the negotiation process for your home. Having the helping hand of an experienced realtor on your side will undoubtedly increase your chances of success.

If you are in the Chicagoland area and are interested in purchasing a home or have any other real estate needs, please make sure to reach out to me. If you are buying, selling, or investing, give us a call or text, and we will do the rest.

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Our home rehab has been extremely busy over the previous six months! We’ve made so many adjustments and enhancements that rather than presenting a list, we’ve opted to show you some of the upgrades we’ve made. Ryan bought this three-bedroom, one-bathroom cape cod in Northlake in December of 2020. The house had a solid foundation. The windows, roof, siding, and foundation are all in good shape, but the mechanicals required repair.

The house was built in 1953; thus, the mechanicals needed to be brought up to date to meet today’s standards. We updated all mechanical systems throughout the house, including the HVAC, plumbing, electrical system, and insulation. This will give owners many years of worry-free service while also increasing efficiency.

This is a significant upgrade over what most people would do when updating their homes. However, we believe that the upgrades will bring the house up to date in terms of efficiency and standards. This will not only give many years of worry-free service, but it will also significantly reduce the home’s energy consumption. Thus, assisting in the improvement of comfort and the reduction of utility costs.

The following shows the progress we’ve made during the last six months.

Electrical Problems

Ryan knew several of the electrical systems in the house had not passed the city’s pre-sale inspection when he bought it. The home lacked several essential GFCI outlets, and several of the electrical outlets were improperly placed. Some cables in outlets were even reversed.

We discovered various DIY electrical updates and adjustments when we removed the drywall and uncovered the electrical systems.

Our biggest problem was the amount of BX electrical cable ran throughout the house. Most homeowners prefer to use BX electrical cable. This is due to the BX cable’s flexibility and ease of installation. However, BX is not allowed for complete wire systems in the Chicagoland area. Electrical must be run through a conduit in the Chicagoland area.

Conduit is significantly stiffer and more difficult to penetrate. As a result, it acts as a much superior insulator for electrical wires. BX and Romex, for instance, are significantly easier to pierce with a nail or a screw.

We opted to update all of the electrical systems after exposing the electrical system to provide extra outlets, new cabling, and updated lighting systems.

WF Electrical was contracted to improve the electrical system. Luis came over to look over our plans and give us an estimate.

Recessed lighting was installed on the first floor of the house. In new homes, recessed lighting is the modern approach to light up interiors. ‘Can lighting,’ as known, allows for a far more even distribution of light throughout a space.

LEDs will also be used for illumination, which is both energy-efficient and long-lasting. We’ll be able to manage light intensity and room temperature using the new LED lighting.

We also added a few lights in the dormers and genuine three-way switches in areas where more light management was required. A few light lights were put to the house’s exterior. A property lite room will completely transform the look and feel of your home.

The household electrical system will power the new wired fire alarm system and carbon monoxide alarms. Because they are connected to a power source, hardwired smoke detectors are more reliable. They also work in tandem, so if the kitchen alarm was set off, so do the rest. This might help you save time when it comes to ensuring your safety.

Hardwired fire alarm systems contain battery backup for continuous functioning in the event of a power outage. Smoke alarms that run on batteries are entirely reliant on the batteries. The existing electrical system will give years of trouble-free service. Shorts, tripping breakers, and fire dangers are no longer an issue.

Plumbing

We thought the plumbing system was in fine shape at first. We were mistaken. We discovered that this was not the case when we exposed the plumbing system. Even though the original plumbing system was copper, it was not correctly routed. In addition, certain plumbing repairs and renovations were performed incorrectly in the residence.

We enlisted the help of Power Plumbing Services to fix the plumbing issues. They came out and suggested installing a sound drainage system as well as new water pipes. Power Plumbing did some of the most excellent work I have ever seen. They installed adequate drains and air chambers all over the house.

The majority of plumbing is hidden behind closed walls. Therefore it’s not supposed to be attractive. A new property’s working plumbing system, on the other hand, can avoid future water leaks. Over 50 years of worry-free service will be provided by the new copper water lines and PVC drainage system.

Heating, ventilation, and air conditioning

The home’s heating system was the system we knew needed the most care. Initially, the house had a boiler system and radiant heat. Radiant heat can be beneficial under the right circumstances; unfortunately, in our case, it precluded the home from having central air conditioning. The baseboard heaters took up some space in our already cramped house. It wasn’t particularly appealing to the eye either.

We had no other choice but to start with removing all of the radiant heat and replace it with a forced-air system. The installation of new ductwork throughout the house was required to make the changeover to the forced air.

Fusion Mechanical, a heating and air conditioning professional, was brought in. Memo and Gerry set up a complete ventilation system with appropriate returns. They installed all of the necessary vents and air return systems in the house. This ensures that air is adequately circulated throughout the home. They were keeping any poorly climate-controlled rooms and places in the house out of the house.

The cape codes were built without a completed upper level in many, if not all, cases. The ventilation systems in most homes were never modified to heat and cool the newly renovated living area appropriately because the original homeowners finished them. As a result, the home’s second story had exceedingly poor climate control. My room was on the second level of a cap code where I grew up. Believe me when I say that the sweltering summer nights were excruciatingly difficult. It was scorching!

Fusion Mechanical additionally insulated the ducting and sealed all seams. This will assist the ductwork to keep some of its temperatures and prevent it from sweating.

A high-efficiency furnace was also installed by Memo and Gerry. Its efficiency will last for many years and save money on gas and electricity costs.

Framing

We were able to investigate the framing of the house because the walls were exposed. We were reasonably sure that the house’s structure was sound. As a result, we were pleased and thrilled to discover that the home’s timber frame was in excellent condition after over 70 years.

We did add a support beam that was missing from the laundry room addition. The original owners did the small bump-out addition to the home likely after the home was constructed. But the previous owner did not properly support the overhead rafters. So we added a new beam onto the opening to the addition.

We also added a support header to remove the wall between the kitchen and dining room. Back in the 1950’s dining rooms were popular, and providing a separation from the kitchen was important.

Nowadays, families are more interested in an open layout. Many prefer an eat-in kitchen and breakfast bar and kitchen islands. The new support beam will open the kitchen to the dining room providing a much more open feel.

In the seconds level, we updated the window openings. This is due to code changes that have been implemented in new home builds. We remove the smaller opening a much bigger window opening to meet the new code.

Insulation

One of the most expensive but beneficial improvements was the home’s insulation. We updated the rafter insulation and exterior wall insulation with closed-cell spray insulation and a vapor barrier. This was to meet the new energy code and provide better comfort for our family.

We could have used the much cheaper insulation option of fiberglass insulation. However, the closed-cell insulation will provide a much better vapor barrier and noise barrier.

Sprayfoam insulation has been a popular option for new construction for many reasons. One advantage spray foam has over other insulation is its excellent and even coverage, preventing bugs and rodents from entering your home. It also improves the sturdiness of your walls, doesn’t introduce pollen or allergens, and is even eco-friendly.

We called Paragon Services to come to help us with insulating the walls and rafters. They installed over 4 inches of closed-cell insulation to our rafter providing R-30 insulation. They also prayed for the exterior wall to be an equivalent R-15. This is far from being the most economical but we believe the new spray insulation will further increase the home’s efficiency and comfort.

What’s next?

Next comes all the stuff you and everyone else can see, the finishes. The drywall, the paint, the cabinets, the floors, and the trim come next. It is what everyone else can see.

The insulation, piping, ductwork, and electrical wire will be hidden behind the wall but busy at work. Ryan found a nice home in a nice neighborhood, now this little cape cod has been upgraded to modern building codes. It will provide safe, comfortable, and efficient housing for many years to come.

The use of metallic conduits in residential wiring have a couple of benefits:

· Safety: Insulation for conduit-encased wiring is protected from rodents and nails that can easily cause electrical fires

· Easy upgrades: Conduits allow for easy rewiring to support more electrical appliances during renovations.

· Save time: You can pull in new wires quickly for upgrades

Ultimately, the use of metal conduits helps save time and money while still increasing the safety of residential spaces. Read on to learn more about the use of metallic conduits in Chicago.

The Use of Conduits To Run Electrical Wires in Chicago’s Residential Buildings

Chicago was founded on a vibrant culture of development, endurance, rebuilding, and innovation. This drove massive growth in Windy City, making it flourish rapidly. But in 1871, the city had a devastating fire – the Great Fire – that reduced most of its residential and commercial structures into cinders. This event marked a significant historical turning point for a city that would soon become a bustling urban hub.

The Great Fire triggered one of the most prominent building booms in the US. The Windy City quickly rip-roared back to life and would later become home to the world’s first skyscraper – The Home Insurance Company’s building. Like a phoenix, the city quickly rose from its ashes!

This fire also brought an urgent need to reinvent the building code so it would include more elaborate fireproof construction methods. As part of the process to increase safety and reduce fire-related deaths, a couple of tweaks were made to the code, including:

· Wider streets

· Enclosed fireproof stairwells

· Unlocked fire exit doors that opened outward

· Clearly marked fire signage

· Protective fireproof walls to divide two buildings if they shared walls.

· Building with fireproof materials

· Installation of HVAC systems behind fireproof containments that can withstand fire outbreaks for up to 2 hours

Indeed, the post-fire architecture was now more conscious of fire risks. In the 1970s, the city’s leadership devised an institutional method to continue updating the code to improve safety.

Conduits After The Chicago Electrical Code Amendment

So, really, why does Chicago require conduit for residential homes? Well, the truth is, Chicago has had a painful history with fires and does not want to relive that history.

Since most residential buildings in Chicago were built between 1850 and 1930s, they still had the same electrical wiring that supported the developing electrical technologies of those times. The electrical cabling was predominantly designed to accommodate just a few lighting loads.

As a result, this cabling system would eventually become severely overloaded as new appliances were developed. Because of this, most populated Chicago suburbs were at risk of electrical fires. In 2017, the city updated its codes that required all residential buildings to use steel conduit runways to allow newer electrical wires to be pulled whenever necessary. This is now commonly referred to as the Chicago Electric Code amendment.

Data from NFIRS shows that after this new amendment, most Chicago suburbs have reported a lower number of electrical fires than the rest of the country. Besides, most Chicago buildings, including those built in the early 1900s, have electrical systems that can now support the evolved appliances of our modern days.

Advantages Of Using Conduits

Steel conduit and electrical metallic tubing (EMT) are metallic enclosures that provide a path for electrical wires in buildings, protecting them from extreme conditions such as moisture, heat, impact, and chemical vapors. They provide a safe and secure channel to conduct electricity. Conduits can either be installed on a wall or ceiling surface or concealed inside walls, ceilings, and floors for a more robust and beautiful wiring system.

Steel conduit truly is the winning wiring solution. Here’s why:

1. Conduits Provide A Safe, Universal Wiring System

Typically, electrical wires have a soft insulation cover that cannot withstand heat and impact. Metallic conduits used in most Chicago homes provide an added protection over these conductors, protecting them against impact at all temperatures.

This added protection reduces the risks of fires and electrocution massively. Unlike PVC conduits that produce toxic fumes when burned, steel conduits have high heat resistance and remain intact even under high temperatures.

When wiring sensitive circuits, metallic conduits reign supreme as it creates a strong shield against electromagnetic fields (EMF) and electromagnetic interference (EMI). It also minimizes EMF emissions from enclosed power cables by up to 95%.

A properly installed metallic conduit raceway provides universal protection in residential, commercial, and industrial applications. Property owners depend on it because it:

· Offers exceptional corrosion resistance

· Have exceptional fire resistance

· Protects against impact at all temperatures

· Has a highly adaptable coefficient of expansion with most construction materials hence doesn’t stretch, break or tear

· Can create a robust waterproof or submersible wiring system

2. Conduits Provide Superior Physical Protection

Metallic conduits raceways are perhaps the most resilient and sustainable raceway options today. They provide strong protection over electrical wires against high impact. Conduits deflect nails and screws that could potentially lead to short-circuiting and cause electrical fires.

3. Steel Conduit Is Reusable

The longevity and reusability of steel conduits constitute a significant advantage in an environment that promotes sustainable building practices. Using steel conduits for residential wiring ensures that you can run multiple circuits through one conduit. This means that you don’t have to “nuke” your walls every time you need to install a new electrical circuit to support your growing needs.

Additionally, conduits ensure easy upgrades of existing appliances without the risk of overloading the existing wiring system. Even in some of the oldest Chicago homes, having a conduit wiring system ensures that you can remove the old, low-capacity wires and run new cables that can support electrical appliances as they evolve. Ultimately, this ability to add new circuits and reuse the raceways helps reduce the overall environmental impact.

4. Conduits Help Save Time And Money

Steel conduits save money from installation throughout their service life. When properly installed, these metallic raceways can be reused to accommodate evolving electrical needs in a building, saving hundreds of dollars that could be used to replace cabling over the years. More wires and circuits can also be added to the same conduit, eliminating the need for new conduits or drilling in the house to install new wiring.

This added flexibility also allows upgrades and renovations to be quickly done since there is no need to tear down walls and floors for new cabling. In fact, running wires through conduits to support more appliances can take half the time it would take other wiring methods. This means that a home renovation in a Chicago suburb can have its wiring replaced in merely an afternoon.

5. Handles The Heat

Fires can quickly get out of hand if they burn the electrical wiring in a building. Residential spaces, gas stations, and grain elevators which are highly susceptible to explosions, require a truly fireproof wiring system. Steel conduits offer a noncombustible, heat-proof cover over electrical cabling, providing additional protection so the conductors don’t become a source of ignition.

Disadvantages Of A Conduit Wiring System

1. High Initial Cost

One of the main disadvantages of using steel conduits is the high installation cost. This electrical wiring system is more expensive than other wiring systems. Fortunately, these costs eventually even out over time due to the system’s durability, reusability, and flexibility to accommodate evolving electrical needs in a typical Chicago home.

2. Difficult To Install

Unlike other wiring systems, steel conduits require experienced expertise to install and run electrical wires. These raceways require well-thought-out plans and schematics for easy reusability. Running electrical wires also requires care to minimize the risk of ripping off the conductor’s insulation that could potentially cause short-circuiting, electrocution, or even fires.

Key Takeaway

The Chicago Electric Code requires steel conduit raceways in all homes to minimize the risk of fires in the Chicago suburbs. This conduit wiring system provides significant safety, durability, and reusability that supports sustainable building practices. When properly installed, steel conduits provide the best wiring protection against different kinds of extreme conditions and hazards.

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Growing up, I never thought I would become a realtor. The truth is, I never even thought it was even a job. Real estate wasn’t my first passion, and it’s not even something I initially loved.

Most people picture real estate agents as ultimate successes, a dream job where you make millions of dollars, drive exotic cars, and show multi-million dollar homes. 

For those on the inside, you know it is far from it. It is a highly competitive business with tons of stress and heartache.

So why did I decide to make a career change into real estate? In this video, I will go over what life events lead me to dedicate my life to real estate.

Buying My First Home

Soon after graduating high school, I went off to pursue my first passion, cars. I went to a trade school and completed an automotive technician training program. I quickly settled into a career in the automotive industry, repairing cars.

Growing up, I thought the goal was to get a job, a house, a car, and live happily ever after. In 2011, at the age of 26, I bought my first home with an FHA mortgage and 3% down. It is still the same home I live in today.

I remember how apprehensive I was when I was first looking for our first home. I didn’t know what I was looking at, who to talk to, the process, nothing. There was new vocabulary I had to become accustomed to and talking to attorneys. Not to mention I was making the most significant financial commitment of my life.

Buying A home to call your own is a huge transition in life, and it is intimidating to first-time home buyers. But for my wife and I, we feel the stress was well worth it. Holding the keys to your first home is hard to explain. Most remember it for the rest of their lives. I know my wife and I still talk about it to this day.

I remember the events leading up to the closing; we remember walking in the home the first time, the negotiation, the timeline, and the stressful closing. Going through the home buying process myself, taught me how to understand buyers better. Buying is stressful.

Our home purchase was my first experience with real estate transactions. I didn’t consider the real estate industry as a career, which came much later. Buying my first home introduced me to the real estate transaction process. The process of buying a home and becoming a homeowner served me well for the career change. 

Investing For Our Future

Shortly after buying our first home, I also changed employers. I was in search of more opportunities and higher wages. I was lucky enough to quickly find another option soon where I had a chance to grow. I found it but with one caveat, no pension and no union.

After talking it over with my wife, I decided to take on the new job to create more significant opportunities. I decided to take on and learn about retirement saving since I was no longer would be dependent on a pension.

I read a few books about retirement saving strategies and investing. One book in particular that stood out was Rich Dad Poor Dad by Robert Kiyosaki. The author describes the differences in assets and liabilities and why your home was not an asset.

Your home is not an asset is still controversial today, but the idea drew me in, and I kept learning. Robert Kiyosaki explains how he earns passive income primarily from business and rental properties. This book was the single reason I decided to invest in real estate for retirement. Kiyosaki and others talk highly of real estate because of its flexibility and creative ways to generate income.

I felt the easiest, most secure way to invest for retirement would be to start investing in real estate. My wife and I saved three years to purchase a rental property; we took a leap of faith and bought our first multi-unit in 2014. It was an old home that needed a lot of work, but it was our first rental property. We learned a lot.

Real Estate once again showed up to fulfill our needs. Three years after marriage, real estate had sheltered us with our home and a rental property to secure retirement income.

Looking For Alternative Income

After purchasing our first rental, we had a lot of things to learn. We learned how to manage tenants, leases, repairs, etc. To make our first investment, I decided further to pursue real estate education and rental management education. I read online that the best way to learn about real estate investing was to be around other successful real estate investors.

There is a lot of GURU late-night real estate information and boot camp programs. I never attended any of those. They all just seemed like a pitch fest for more expensive programs. Instead, I looked online and found a non for profit real estate investor association in the Chicagoland area. The group meets once a month, and it was direct experience sharing and education.

I meet other real estate investors with years of experience and dozens of rentals. At first, our goal was to own only a few, but meeting other local investors opened my mind to the possibility of many more.

I originally joined the real estate investing association in learning how to manage one rental property.  I quickly found much more going on in those meetings than just business deals; it was about building relationships and learning from other investors.

I quickly learned how many of the real estate investors were making money and supplementing their income. Some investors were flipping real estate, others were buying and holding.

Being around that group opened up my mind to the possibilities and quickly made me desire more than just one rental property. I joined the board of directors at the real estate investing association and found ways to purchase more real estate. 

Finding A Passion For Real Estate

I originally joined the real estate investing association to learn. I found out there were many ways to invest in real estate. Some real estate investors were flipping properties, note investing, and holding rental properties. Most Importantly, it was not a flat-out pitch fest. It was more about learning than about selling.

I spend hours trying my best to understand the business to increase the number of rentals I owned. I then found out about wholesaling and decided it would be a great way to purchase more real estate.

I went on YouTube, searches for how to find a good deal to sell quickly with no money down or maintenance costs. I also researched what other people were doing to do better – learn from their mistakes. My goal was to continue my full-time job and invest in rental real estate on the side.

I had some success with wholesaling and purchased a few properties. I learn on my own how to write a contract and buy a home without the help of a real estate agent. Looking back now, I was lucky enough not to make any significant mistakes.

This period of my real estate career was very beneficial in understanding the process of buying homes and estimating repair costs. A skill I would later further developed.

Building A Business

In 2018 I decided to become a licensed Illinois real estate broker. Friends and family would ask me to tag along on home showings to get my suggestion and opinions of homes they were viewing. After a few showing with multiple friends, I decided to get paid for it by representing them in the purchase or sale of their home. The five years I invested in real estate laid the foundation for my real estate agent career.

At the same time, I also decided to change my marketing plan from buying homes to helping to buy, sell, and invest in homes. Ryan and I are good friends that both belief in the power of real estate. It’s simple, forever in demand, and the foundation of generation wealth.

Becoming a real estate agent has also lead me to developed skills to market myself. I have learned a ton about business just from becoming real estate agents.

After experiencing the real estate market first hand by buying houses, it was pretty easy to see why I became so passionate about homes. What started as side biz and retirement saving now was pushing me to develop further.

Our goal is to help people better understand real estate. To learn how to buy it, how to sell it, and how to invest with it.

The more time I spend learning about real estate, the better my understanding of it has become. It’s not just a job or some passion project for me anymore. Instead, it’s what is now one of my biggest passions and careers.

Being A Service To Others

I wish I could tell you that I know everything and I am the most outstanding real estate agent the world has ever known. The truth is I am learning something new about real estate every single day. I’m fortunate because I have the opportunity to work with some of the most amazing people and help them invest their money.

Being a real estate agent is about being willing to serve others, not just your interests. It’s about helping others by giving advice or knowledge you already possess.

It’s About Giving Something Back

I am fully committed to real estate as a career. I am committed to learning everything that I can and staying current on all the latest trends, techniques, and strategies in this field.

I have always been passionate about home design and architecture, so working for myself has allowed me to experience some of the most impressive homes out there!

My goal is to provide the same high level of service I would want for myself. The world needs real estate agents more than ever before, and I am committed to being one of those people who helps play an active role in creating change where it’s needed most.

The only reason we strive to provide the videos and content on our blog is our Future. We believe that it’s essential to teach others about the power of real estate. We also believe now more than ever that homeownership is the cornerstone of the American dream.

Our Future

I’m not sure what comes next, so this is as far as I can go. What I’m sure of is real estate will be my new priority. We are still investing in real estate and plan to help others accomplish the dream of homeownership.

There is a new player in the industry, such as Zillow and Redfin. Some believe this is the beginning of the end for real estate agents. But I think it is a chance for agents to rethink the way they operate. We want to be the trusted source for your real estate needs. We want to share our experiences, our failures, and our victories.

No one knows what lies ahead for any of us. What we are sure of is our commitment to homeownership and each other and real estate. We hope you follow us along on our journey in the real estate industry.

“Courage taught me no matter how bad a crisis gets … any sound investment will eventually pay off.”

This blog should be encouraging to everyone, since no one can be an expert in every location. This blog will give you tips on how you can get ‘insider information’. It’s possible because in real estate, no one can be an expert in every location, thats impossible. 

Real Estate is hyperlocal, and even though I know more about real estate in general, you know more than me about your specific block: You know which neighbors are loud, unfriendly, or seemingly up to no good. I have more information about my block than you do because I live here, and vice versa. 

We are investing in Northlake because we understand the market. I have seen enough properties in Northlake to confidently judge home price and condition. When I first looked at 341 Armitage, I saw a great deal, but it was presented horribly and was even underpriced.

Key Points that led to my decision

• I walked every single new listing in Northlake for weeks, trying to help another buyer with a similar purchase. Seeing many homes gave me a good idea of the condition, sales price, and DOM.

• I spoke with a lot of listing agents, attended open houses, and talked to them over the phone. I asked questions regarding traffic, offers, and overall market sentiment.

• I represented a buyer in a purchase of another cape cod, about a block and a half away. I spoke to its listing agent, and although my buyer was the highest and best, it received many offers well above asking.

• My sister tested the rental market in Northlake and received an additional $150 dollars more than what I had expected. It gave us confidence that not only is their buyer demand in Northlake, but it is increasing, as well.

Why Not Flip Something Bigger In Another Area?

We should not forget that we are still not clear of the most devastating pandemic of our lifetime. Although I am optimistic, I do see many uncertainties and possible side effects from the lockdowns in March that could impact future investments. 

Trying to play risk manager here, I feel it’s less risky to strategically invest in this hot market, and in the hottest price range with the highest demand.

Taking a look at Altos research, we see it is not A or B Neighborhoods that are in a seller’s market. It’s specifically C middle-class neighborhoods that are seeing the highest demand.

In my opinion, the easiest positioning is to improve 341 Armitage from the lower price range into the median MLS sales price of $250k+.

What are the Possible Negatives of Investing in Northlake?

• Middle-class neighborhoods I have found are often very strict with code violations, inspections, and additional permits. This drowns out rehab timelines. I have never dealt with the Northlake building department, but my father said they are friendly and helpful. I hope he is right because this home needs a lot of work. 

• Northlake is a blue-collar middle-class neighborhood. If we see another recession or we are unable to fully recover, neighborhoods like Northlake and their residents are likely to be some of the most affected. If there is no demand and no buyer, home prices come down.

Conclusion

In conclusion, 341 Armitage is an investment, and like with all investments, it comes with risk. Homes and home values are somewhat subjective. Human emotion and market conditions affect the price, and I have often found myself questioning my decision, whether I am on the losing or winning side of the bid. If you are the winning bid you often wonder what you missed that other potential buyers found. If you are on the losing side, you also wonder what you missed, and why someone else’s subjective value is higher than yours.

Investing in real estate is risky, but if you think it is too risky, you should see how chancy it can be not to invest at all. Do your due diligence and make the best decision with the best information you have. You will either win or learn. Either way, it’s a step forward.  

But this particular house is a little bit different than my usual day-to-day closings because the client this time was ME!

This house is the first home I’ve ever purchased, which is exciting. But it’s even more exciting because it’s also my first live and flip project.

That’s right! I bought a house for myself, but more importantly, this home also kicks off a new series of content that’s coming to the Ralphie and Ryan Show that you will want to see whether you’re a buyer, realtor, or a seller. This series will benefit you.

The process of being on the other side of the deal was exciting and terrifying at the same time. I got to ride the rollercoaster of emotions that most buyers feel and I’m glad I did because it gave me a fresh perspective on being a realtor in the Chicagoland area.

One of my goals for this house is to make money so that I can achieve financial freedom. But I also told myself if I lose money that’s fine, if I make money that’s great, if I break even that’s fine too. It’s all about learning through experience and taking you along with me to show you what the process of a live and flip is like.

The goal of this series is to show our audience what it’s like:

• to get pre-approved
• make an offer 
• negotiate 
• and everything that goes in between

Buying this house in particular was an interesting experience. There were some days where I felt hopeless and I would go to sleep and wake up and say to myself “I’m not getting this home.” 

The closing of this home was rescheduled three different times, my attorney even got COVID and could not attend the closing. 

But through the hardship, I decided to document the whole process with video and photos of my actual documents to show you every single detail that’s involved in the process of buying a new home to flip. I am being fully transparent and holding nothing back.

The house needs extensive work, so we’re going to show you how we find contractors and painters as well as how we’re going to shop for appliances, along with all the other details a house needs to feel like home. 

I bought this house, because not only am I learning, but I truly believe the best way to learn is just to get up and get it done and figure it out through experiencing the process.

If I make mistakes, I will learn from them and I want you to learn from my mistakes too. I want you to get comfortable and confident with purchasing real estate because it truly is the best investment, as Ralphie proved in this article.

Closing on a house is not possible without a great team. So I want to give a special thanks to:

Ralphie, my real estate agent

Jason, my lender

Arthur, my attorney

And most importantly, my grandmother for the gift that sealed the deal.

Thank you to my team and YOU for all the support with this new series. 

If you live in Illinois or Chicagoland, you’re probably used to looking at your property tax bill in despair –  on average, it consumes 5-10% of household income. Ouch. With this in mind, you might have found yourself wondering what exactly property taxes pay for in Illinois.

As real estate agents in the local area, we get asked this question all the time. Here’s a brief overview.

A History of Property Taxes In Illinois

The property tax is the largest tax in this state and a major revenue source for local governments – in fact, it was the main revenue source until the Great Depression of the 1930s. Ever since Illinois’ early days, property taxes have played an important role in building crucial infrastructure.

When Illinois formed in 1818, the Illinois Constitution allowed state and local taxing districts to set tax directly in line with a property’s value, and the state government imposed real estate taxes up until 1932. Since then, only local government taxing districts have set property taxes, meaning property owners must pay the taxes directly to their district.

But once we pay them, what happens?

The uses of property taxes in Illinois

Property taxes should mostly finance services that benefit citizens in the area. The largest share of the local property tax goes to school districts for education, but this isn’t the only use. Other public services include police and fire protection, street maintenance, and recreation. 

Let’s look at a real example from DuPage County in Downers Grove, Illinois.

Data from the county in 2019 shows that 35.38% of property taxes went to the grade school district, while 33.130% went to the high school district. Here’s where the remainder went:

• Village fire department: 7.32%
• Village Park: 5.78%
• College of Dupage: 4.43%
• The county: 3.12%
• Forest preserve: 2.55%
• Downer’s fire: 2.11%
• Downer’s township for roads: 0.88%
• Sanitary district for wastewater services: 0.7%
• Downers Township: 0.59%
• Downers Grove airport: 0.3%

To find your exact tax distribution numbers by parcel, you can also check the county assessor’s website.

Final Words

Hopefully, seeing the breakdown above gives you some peace that your property taxes go to a good cause and benefit you in the long run. 

If you have any further questions, don’t hesitate to reach out to us. We’re real estate agents based in the Chicagoland area and serve homeowners in the western suburbs of DuPage County – we’re always ready to serve people in the local area.

At that point, you will never have to worry about money again. Your money is working hard for you, so you will never have to work hard for it. Your investments are paying for your mimosas and luxury lifestyle. Wouldn’t that be a dream? 

Well, if you ever hope to make this dream a reality, you’re going to have to invest. But in the investment world, where the goal is to multiply your dollars, there are only two assets that dominate: stocks and real estate. They have long been pinned against each other, and have created trillions of dollars in returns for both classes of investors; however, the following question often arises: 

Which asset is greater: stocks or real estate?

In the search for the answer, I Googled “What makes a good investment?” and found characteristics of good investments. They are:

• Safety
• Predictable outcome or guaranteed return
• In demand
• Consistent earnings or payout
• Easy to buy or sell
• Undervalued

In this blog, I want to prove to you that real estate was, is, and forever will be the greatest asset and best investment in the world.

Safety

The first characteristic of a good investment is safety. In this comparison between the two assets, it’s not even close. Real estate has long been the most durable asset by far. It’s literally as old as dirt. It was here long before us, and will be here for long after we are all gone. Land can be flooded, set on fire, and even bombed upon, but even the world’s largest bombs can’t destroy it.

Not only is it durable as all hell, but according to the United States constitution, it is our God-given right to own it. It’s your piece of the sky and earth. It’s a little spot to call your own, where no one can tell you what to do or what to wear. It’s the pinnacle of freedom and what this country was founded upon.

Stocks or equities, on the contrary, are far from safe. It’s tough to really justify its safety really! Can you name anyone, other than the Simpsons, who can predict the future or tell you if any stock will be up, down, or sideways? Nope! No one can! 

Take, for example, if your grandfather had invested in one the top 500 stocks of the 1960s. These 500 companies were thought of as “one-decision stocks: buy and never sell.” However, since the 1960s, the former top 500 has experienced quite a lot of turn over. According to a Bloomberg report from March 2007, 50 years after the modern-day S&P 500 came into existence, there were only 86 original members still remaining. Your grandfather would have had a 1 in 20 chance of hitting a winner that would still be dominant today. 

New data shows that companies are now moving in and out of the S&P 500 more than ever before. The truth is, your chances of picking a single winner in the market is less than 5 percent. So, how can you call an asset safe when you are not even behind the wheel? Equities are like linking your cart to someone else’s horse, where you hope that whoever is steering the horse isn’t a mad man. If he is, you have two choices: either jump off or wait until the fiery end. Steering the horse yourself is not an option; you’re just along for the ride.

Predictable Outcome

The second characteristic of a good investment is a predictable outcome or guaranteed return. 

Guaranteed is a strong word; nothing is really guaranteed in life. However, something that can be predictable and almost guaranteed forever is our need for shelter. It is one of our basic needs, among food, water, and clothes. Shelter was needed in the 1720s, 1820s, 1920s, and 2020s, and will continue to be needed in the future. No technology can destroy it. Besides, real estate also holds multiple purposes; it can be used for mining and drilling, as well as industrial, warehouse, retail, and office space.

If you can predict a home’s desirability, you can almost certainly predict its return. A single-family rental home, for example, will have a predictable return because it will always have predictable demand. Whatever it rents for today is likely what it will rent for 100 years from now, adjusted for inflation, of course. If anything is predictable, it is the ability for real estate to appreciate with inflation. It has done so for almost 200 years.
Stocks, on the other hand, are far from predictable.

There is 24-hour market coverage, where the greatest economic minds from M.I.T, Yale, and Princeton argue over the direction of the market. Remember the 1990s? No one could have imagined that Walmart would ever have to bend a knee to any other retailer. But then Amazon showed up. And Amazon wasn’t the first disruptor. Walmart did it to K-Mart, Netflix did it to Blockbuster, Google did it to yahoo, Yahoo did it to AOL, and so on. The fact is, when there is high competition, long-term returns are impossible to predict. This is why stock prices go up and down more than your favorite roller coaster. If volatility makes your stomach hurt, stocks or equities are not for you.

In Demand   

The third characteristic of a good investment is long and predictable demand. 

What can be more desirable than land? Real estate will forever be in demand because it is literally part of everything you do in everyday life. Need to go to the grocery store? Someone owns the piece of land that business is on. Going to work? Someone owns the building at which you work. Going to your favorite destination? Someone owns that too. Land or real estate is literally part of every business or place you most desire. That is why real estate will forever be in demand.

Stocks, on the other hand, have high demand whenever that product or service is sexy and in demand. Sure, Tesla has high demand and is hotter than Turbo Man at Christmas. But, believe me, eventually that demand will fade.

Remember the Ford Motor Company? It was the hottest automotive stock to own in the 1960s. They had just introduced that hot, sexy sports car called the Mustang, and had just come back from winning multiple 24-hour Le Mans wins over the Italians with their prestigious Ferraris. Then, in the mid-70s, they changed the look of the Mustangs, and the Mustang went from hot to not. It’s difficult to imagine Tesla not being the be-all or end-all, but eventually, Teslas will stop being hot. You will stop thinking of Elon’s dance moves as funny, and they will become just plain lame. 

There is no question that real estate wins this one too! But go ahead, buy that Tesla you always wanted, because even if you do, you’re still going to need a nice winding road on a piece of land to enjoy it on.

Consistent Earnings or Payout

The fourth characteristic of a good investment is consistent earnings or payout.

For real estate, this is probably its strongest point. Most real estate investors invest in residential property. The difference between the rent paid and property expenses like property tax, insurance, and maintenance is free cash flow or earnings. As long as you bought right and can keep the property desirable, you are likely going to benefit from positive cash flow and earnings. Most importantly, by having control of the asset, you will have input on the earnings of the investment and what payout it will give.

Most stocks, on the other hand, don’t even give shareholders payout or what is called a dividend. And of those that do offer dividends, only thirteen US stocks have paid a consistent dividend to its shareholders for over 100 years. So, if you own stock with a nice dividend, don’t be surprised if the board decides to lower or even eliminate the dividend payout next year.

They will blame it on the virus; however, the truth is, it doesn’t matter what you want. You’re not in control. Regarding earnings, sure, high earnings will increase the value of your stock, but you don’t have a say in what they do with the cash flow. This goes back to control; if you can’t control the asset, you’re just along for the ride.

Real estate wins this one hands down!

Easy to Buy or Sell

The fifth characteristic of a good investment is the ability to easily buy or sell.

I know what you are thinking…  Ha! Yeah, try to fix this one Ralphy! No way is real estate better than equities in this aspect. I mean, it takes some houses years to sell, right? Well, in my opinion, this one is kind of a tie. Let me explain.

Sure, there is no doubt you can much more easily click a few buttons in your investment account and sell your stocks much quicker and easier than selling a piece of land. But that is only half of the battle. I’d like to argue that it is even easier to buy real estate than stocks. 

Sure, it might be faster to buy stocks, but is it really easier? I don’t know about that. Keep in mind, when you are buying real estate, you are usually buying with a professional called a real estate broker. He or she can walk you through the process and will prevent you from making critical mistakes during the process. This likely makes it easier than most people randomly picking their favorite hot ticker.  

Separately, the US government will aid most families or individuals with first-time homeowner programs, down payment assistance, and government-guaranteed FHA loans. Imagine walking into a bank and asking them for a 30-year loan to buy $250,000 dollars worth of Tesla stock, with a 3.5 percent interest rate and a 3 percent down payment. The banker would laugh at you and likely proceed to walk you to the door. He would think you are delusional!

I would like to call this one a tie, but to give stocks one and not call this contest a complete shutout, I’m going to give this one to stocks. It’s close in my opinion, but stocks squeak out the win.

Undervalued

The sixth and final characteristic of a good investment is buying the asset when it is undervalued.

This characteristic once again highlights yet another aspect of real estate that is a much better investment than equities. The real estate market is called an inefficient market, meaning that a transaction can be completed with only two people: the buyer and seller.

During the negotiation process, for what’s called the meeting of the minds, either the buyer or seller might know something about the property that the other is not aware of, or might just simply be better positioned. This would cause either of the two parties to have an upper hand. This is primarily the reason why you are more likely to be able to buy undervalued real estate than undervalued stocks. This gives some people the ability to buy undervalued real estate and resell it for a profit almost immediately to another buyer.  

The stock market is the total opposite. It is what is called informational efficient markets. This means every buyer or seller has the same information as everyone else, thus making the chances of finding undervalued stocks almost impossible. If anyone has information on a company that affects the price of its stock and you buy or sell on the fact alone, you could go to jail for what is called insider trading. That’s what Martha Steward got popped for. She spent two years in the slammer for it.

That aside, stocks are valued all over the place and for different reasons. The scariest detail is that no one can really tell you what’s built into the price. Some stocks don’t even have earnings to reflect its value. These stocks are valued with the expectation that earnings long in the future will eventually meet and match the price of the stock. But expecting is not investing. Nothing in the future is guaranteed, right? Speculation is also not investing. It’s more like what happens in Vegas, only they call it gambling. 

Real estate wins this category too. Keep in mind, I’m not saying I don’t play the markets too. I like the thrill of it. However, I don’t really consider it my most secure investment. That’s what I have real estate for.

Real Estate Wins This Challenge 5-1

At this point, you are probably thinking that this is just another realtor trying to convince you to buy a house so he can cash in on a commission, right?

Well, would you feel better if you had the opinion of one of the greatest equities investors still alive? Would you be interested in hearing what Warren Buffet—the third-richest person in the United States, with a net worth of over 80 billion dollars—thinks of the subject? Well, you are in luck. Warren has input if you dare listen.

I hope this blog has given you information on why I believe real estate is the greatest investment in the world. If this was not enough, I would like to leave you with one last point to hopefully help push you over the edge. 

The company stock you are purchasing is headquartered on a piece of land. Its manufacturing plant is sitting on a piece of land, as are the materials used to manufacture that Tesla, iPhone, and everything else in your possession. They all came from minerals mined from a piece of land. And the power to fuel all those gadgets? Yes, that comes from the earth, too. Literally, everything we buy and sell needs land to create it. That is why I believe real estate is the greatest investment in the world!