Investing in Chicago’s North Shore real estate can mean different things to different people. With that said, how can you be sure you are making the right decision? It helps to have an experienced real estate agent who demonstrates he/she has an established pulse on market conditions. Otherwise, below are a few tips that can shed light based on individual preference or circumstance:

A Personal Residence

1. if you are not planning to own on the North Shore for at least five years you will most likely not be getting positive returns on your investment. The longer you own it, the better the chances for appreciation in value and wealth building.

2. a good personal real estate investment is one that will increase your net worth over time. you need to look at how much you are paying in housing expense versus how much that amount would be if you were just renting someone else’s property. So the overall question again is, “Is your wealth going to improve by owning the property?”

As proof positive on this, find someone who has owned real estate for 20, 30, 40 years and ask them what is a good real estate investment? It is generally easy to find them, they are retired, living comfortably, and usually happy to tell you about the properties they bought years ago!

Investment Properties

1. your returns are part cash flows and part appreciation in value. For example, if your property rental income minus expenses produced $250 per month positive ($3,000 per year); and your invested cash equity was say $50,000, that’s a cash on cash return of 6.00% ($3,000/$50,000). And that is a pretty darn good deal in real estate.

2. some investment properties my not be worth a second look! Often, unconventional property such as a boat house or beach front cabana on an island no one can pronounce are ones to stay clear of. Purchase something like that and expect the net rental income to be low compared to the purchase price, usually resulting in  projected negative cash on cash returns. So if you buy a fancy property with negative (4.0%) cash on cash returns, even if it appreciates 2.0% per year, you are typically at a 0.0%, or worse, return on your equity cash investment. And that isn’t a deal most experienced investors would take. Will January or 2012 be your time for real estate investing?

See additional North Shore real estate investment information and investment/mortgage calculators HERE and HERE