Home Buying in 60615>Question Details

Kmhaley, Home Buyer in 60615

Will I have trouble renting out and making a profit on a 2 bed condo in Hyde Park, IL near Univ of Chicago if I decide to buy?

Asked by Kmhaley, 60615 Sun Oct 25, 2009

My husband and I are going to be moving to Hyde Park, Illinois and are thinking about purchasing a 1-2 bedroom condo near University of Chicago. We will only be in that area for a 3 year appointment and then will be moving elsewhere. We are really interested in renting the condo out after we leave but are concerned because we have never been landlords before. Do you think we'd have trouble renting out a condo in Hyde Park AND making a profit after paying the mortgage on it? Also-are there any tips or nightmares about landlording anyone can share?

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7
Your question is difficult to answer in the abstract. You need to understand the costs associated with ownership (mortgage, taxes, assessments and insurance) and what comparable units are renting for today. Then you need to get an idea of how rental rates have been trending in the area.

With that information, you can start to make an informed assessment. But you should also consider any rules that may be in place that might limit your ability to rent the unit now or in the future. For example, some building have caps which could prohibit your ability to rent if more of your neighbors rent their homes first.

Best of luck!

Jenny
1 vote Thank Flag Link Sun Oct 25, 2009
Dear Kmhaley:

I am very familiar with Hyde Park. Yes, I do believe you can purchase a 2 bedroom condo as an investment property. It is important you find a unique and well maintained building to purchase this condo. I have found from past experience that a secured building with garage parking is key. I sugest the Renaissance of Hyde Park Building. If you would like more information please contact me. I have managed 2 rentals for over five years.

Thank you,
Maria Clark
mariasellsrealty.com
Infinity Realty Group
1608 West Sherwin
Chicago, Il 60626
312 953 4484
immariaclark@yahoo.com
0 votes Thank Flag Link Sun Oct 25, 2009
Consider that with a condo comes HOA fees. That could mean at some point in time that you recieve an assessment of several thousand dollars of needed repairs that they do not have money saved for. If this happens you could lose years of profit in one day. If the condo association does not save money for repairs in the future it si likely to happen. Plus if other condo renters, oops, owners do not pay their HOA fees you may end up paying more for their lack of payments. Jsut a few more things to think about.
0 votes Thank Flag Link Sun Oct 25, 2009
Forget rental services - you'll have a limited selection through them.

Access the MLS through a reputable broker's Web site - you'll find nearly 100 homes and condos listed for rent in Hyde Park, many with photos and virtually all with addresses.

Pick up a copy of the small Apartment Guide from the rack at a local supermarket. You'll find many Hyde Park buildings advertising there.
Web Reference: http://yochicago.com
0 votes Thank Flag Link Sun Oct 25, 2009
Hmmm....

Agreed. Very hard to answer without specific info.

A few things to consider as you make this decision:

1. Does the association have a regulation limiting the number of units that can be rented. This can also change over the three years you live there. It may be a variable that forces you to sell.

2. What is your capacity to manage a unit remotely? If you had to pay for management and leasing services, this can cost two month rent + per year, not to mention vacancy periods.

3. How much do the Principal, Interest, Taxes and Assessments add up to. Is this less than market rent? In my experience this doesn't work in Hyde Park. Rents are usually lower than the cost of ownership. Owning in Hyde Park make sense for lifestyle reasons, to fix the cost of home-ownership if your looking to stay for a long period. Investors make money in Hyde Park, but not typically in renting condos.

I've worked with quite a few U of C faculty that have relocated, and the three-five year appointment is one that causes much consternation when it comes to purchasing vs.renting. On the one hand, the quality of most rental housing isn't great. We all know the company that has a virtual monopoly in Hyde Park and they aren't know for high quality living. The stuff that is real nice has huge rents. Ownership is a better way to live, but the reality is that Hyde Park is the Slow and Steady appreciator, that won't jump in value in 3 years that would justify selling, although you never know for sure, especially in this market. 5 years, likely.

You may want to see what's out there in the rental market with Chicago Apartment Finders (on 53rd). They may have some great condos for rent. They also do leasing and management, by the way, for single unit owners that don't want to sell.

Feel free to contact me with any questions.

Best of Luck

Wayne Beals
wbeals@kw.com
0 votes Thank Flag Link Sun Oct 25, 2009
There's a big market for upscale, updated rentals in Hyde Park because there are so many grad students and visiting faculty w/decent incomes but here only short-term. In my opinion (as a renter), many rentals in the neighborhood are WAY overpriced , but this would be to your advantage. We're renting a large one-bedroom apartment in a highrise for $1300 and most comparable places where asking at least $1500 for similar units. The most popular rental props (Regents Park and Hyde Park Towers) here ask $1500 to $2500 for 2 bedrooms and the units aren't even updated. I'd recommend buying either in a highrise or gut rehab courtyard building as close to the lake as possible, between 52nd and 58th... South Hydepark/Woodlawn (59th-63rdish) is still a little rough but rapidly changing, so that might be a good place to buy now and turn a big profit later.
0 votes Thank Flag Link Sun Oct 25, 2009
Where is 'elsewhere'? If it is to another state or more than a 3 hour drive, you might just rent the next 3 years as you sound like you have never been landlords before. While renting out a condo is 'usually' not that much work, IF things should come up and you are not around, it can be a headache. I cannot crunch numbers without knowing the price you will pay, the mortgage amount, taxes, assessments etc, but the market tends to favor tenants these days so rents are somewhat soft. Even in a good market, you may have difficulty just breaking even on just about any condo in just about any neighborhood. The biggest problem is finding a good tenant. If you go 2-3 months vacant once in a while, is that a problem, because it could happen. Forget about making a profit, but if I knew more of the numbers, I could give you a better answer.

philip
0 votes Thank Flag Link Sun Oct 25, 2009
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