1031 Exchange in Kankakee MSA
The Kankakee MSA offers ultra-affordable 1031 exchange opportunities with property values 69% below national average, but requires careful analysis due to high property tax rates (2.29-3.07%) that impact net returns despite low acquisition costs.
Population
107,000
Key Industries
Healthcare (8,624 workers), Manufacturing (6,945 workers), Transportation
Table of Contents
Information is for educational purposes only. Consult qualified professionals for specific advice.
Local Tax Considerations
Property taxes, transfer taxes, and local incentives
Property Tax Rates
Average Rate
2.30% - 3.10%
Assessment Method
Assessed Value (Illinois Property Tax Code)
MSA rate (2.29-3.07%) vs State average (2.11%)
+9% to +45% above state average
Transfer Taxes & Fees
Transfer Tax Rate
$0.50 per $500 of value
Illinois state transfer tax plus local recording fees
Local Tax Incentives
Illinois Enterprise Zone
Tax incentives for business development and job creation
Eligibility: Qualifying commercial and industrial developments
Kankakee County Development Incentives
Local incentives for business expansion and retention
Eligibility: Companies creating jobs and investing in the area
Opportunity Zones
Number of Zones
2
Key Locations
- Downtown Kankakee
- South Kankakee
Opportunity Zones offer significant tax benefits for long-term investments, including deferral and potential elimination of capital gains taxes.
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Market Profile Dashboard
Economic indicators and market trends
Population
107,000
Growth: +0.8% annually
Median Income
$68,325
Unemployment
5.9%
Job Growth
+1.2% annually
Economic Drivers
Market Trends
Median Home Price
$137,000 - $240,000
Average Rent
$985/mo
Cap Rates
12.0% - 18.0%
Demographics
Median Age
39 years
Bachelor's Degree+
22.8%
Owner Occupied
58.2%
Property Type Analysis
Investment opportunities by asset class
Multifamily
Strong demand from healthcare workers, manufacturing employees, and students with ultra-high cap rates due to low acquisition costs.
Market Metrics
- Cap Rates: 14.5%
- Vacancy Trends: Moderate vacancy at 12.8% due to economic challenges but offset by affordability
- Demand Forecast: Stable demand from healthcare and manufacturing employment
Risk Factors
- High property tax burden
- Lower income demographics
- Economic transition challenges
Opportunities
- Ultra-high cap rates (14-18%)
- Extremely low acquisition costs
- Healthcare worker housing demand
Single-Family Rental
Popular with manufacturing workers, healthcare professionals, and families seeking affordable housing.
Market Metrics
- Cap Rates: 15.8%
- Vacancy Trends: Moderate vacancy at 11.5% with good tenant retention in better areas
- Demand Forecast: Steady fundamentals with manufacturing and healthcare employment
Risk Factors
- High property tax burden impacts net returns
- Lower income tenant base
- Economic transition risks
Opportunities
- Exceptional cap rates (12-18%)
- Ultra-affordable acquisition ($110K-$240K)
- Strong cash flow potential
Neighborhood Spotlights
Up-and-coming areas and investment hotspots
Downtown Kankakee
Urban core with opportunity zone designation and revitalization efforts
Investment Thesis
Opportunity zone benefits, ultra-low acquisition costs, and potential for appreciation as downtown develops.
Median Price
$125,000
Price Growth
+4.8% YoY
Rental Yield
15.2%
Days on Market
45 days
Key Highlights
Development Pipeline
Downtown revitalization and mixed-use development projects
Bourbonnais
Suburban area with higher home values and family amenities
Investment Thesis
Higher-income demographics, family rental market, and proximity to Olivet Nazarene University.
Median Price
$185,000
Price Growth
+3.2% YoY
Rental Yield
12.8%
Days on Market
32 days
Key Highlights
Development Pipeline
Suburban residential development
Bradley
Industrial area with manufacturing employment and affordable housing
Investment Thesis
Manufacturing worker housing demand, affordable prices, and industrial development.
Median Price
$155,000
Price Growth
+5.1% YoY
Rental Yield
14.5%
Days on Market
38 days
Key Highlights
Development Pipeline
Industrial and workforce housing development
South Kankakee
Opportunity zone area with development potential and low entry costs
Investment Thesis
Opportunity zone benefits, extremely low acquisition costs, and potential for long-term appreciation.
Median Price
$110,000
Price Growth
+6.8% YoY
Rental Yield
16.8%
Days on Market
52 days
Key Highlights
Development Pipeline
Opportunity zone development and affordable housing projects
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Frequently Asked Questions
Common questions about Kankakee 1031 exchanges
Kankakee offers ultra-affordable acquisition costs ($137K-$240K median, 69% below national average) creating exceptional cap rates (12-18%) that can offset high property tax rates (2.29-3.07%). The key is achieving strong rental income that exceeds the higher carrying costs.
Property taxes of 2.29-3.07% (vs. 1.02% national) significantly impact net returns, but ultra-low acquisition costs can still generate strong cash flow. A $150K property might have $3,450-$4,605 annual taxes, but rental income of $1,200-$1,400/month can still provide positive cash flow.
Yes, two opportunity zones exist: Downtown Kankakee and South Kankakee. These offer potential tax benefits for qualifying investments including deferral and possible exclusion of capital gains for long-term investments, particularly valuable given the low acquisition costs.
The economy is anchored by healthcare (8,624 workers), manufacturing (6,945 workers), retail trade (6,389 workers), and emerging battery manufacturing (Gotion USA). This provides diversified employment base supporting rental demand despite economic challenges.
Properties 69% below national average create opportunities for high cap rates (12-18%) and strong cash flow, but require careful analysis of property taxes, tenant demographics, and local market conditions. Success depends on achieving rental rates that exceed carrying costs including high property taxes.