Chicago Rental Properties
Why buy a Chicago rental property? If you pick the right property, you can turn a pretty penny.
It's all about location, location, location. A beautiful property in the wrong part of town won't be nearly as profitable as a slightly less desirable one that sits in a great part of the city.
Being a landlord is a business, so you have to think that way. You are investing in property to turn a profit. You'll need to take a hard look at potential revenues and expenses associated with the property. It's not worth buying a rental property if you can't find a way to make it profitable. Here are some things to think about when considering purchasing a Chicago rental property.
What type of building styles should I consider?
It's not always a good idea to buy buildings with unique styles. The layout of the building might not be conducive for maximum occupancy. It's better to stick with conventionally shaped buildings. You should consider properties that you would want to live in.
Should I buy a single-family home or a multi unit building?
Single family homes appeal to renters because they get more square footage for their money. Since these homes tend to have a slower turnover rate than multi-unit buildings, it will take longer for your initial investment to pay off. On the other hand, if you decide to sell your single-family home, its resale tends to be greater than multi-unit buildings.
Multi-unit buildings offer a faster return on your investment due to multiple renters living in one building. They have much higher turnover rates as opposed to single-family homes. Multi-unit buildings are harder to finance than single-family homes and usually require a minimal down payment of 20%. They tend to be underwritten by relationship-based private lenders. Residential multi-unit buildings of up to 4 units are more "financeable" and may even qualify for FHA type loan products.
Seriously considering buying a Chicago property?
Thoroughly inspect the property. If it is a multi-unit building, check all the units. Don't just take a look at a representative unit. The rest of the units might not be in the same condition. View the vacancy rate of the building over the past few years. Make sure you leave room in your budget for possible vacancies. Remember that you will also be responsible for building maintenance. Check to see if the building has recently undergone any repairs, or if it is in need of them. The latter could substantially increase how much you have to initially invest into the property.
