satpreetsingh, Home Buyer in Chicago, IL

What all should a buyer keep in mind when buying an property in Chicago downtown/loop that (s)he plans to put on the rental market immediately?

Asked by satpreetsingh, Chicago, IL Sat Oct 5, 2013

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The below are excellent, I would say just make sure you have accurate market rents and you understand your clientele in the specific area you are buying. Don't forget to look at rentals outside of the mls to get a full picture of things. Look at move-in/move out costs for the tenant as they can sometimes be deal killers in some condos turned rentals.
1 vote Thank Flag Link Sat Oct 5, 2013
The peak of the rental market is April 1 - September 30. If you close during that time, you are in the market.

You WILL NOT get more than market value, no matter what upgrades you put in it, but it will rent before the other units if it is nicely upgraded. Renters do not care as much about crown moldings as buyers.

If the tenant had credit issues and you have a mortgage, their credit issues could become your credit issues.

Read and understand the Chicago Landlord Tenant Ordinance and give them a copy and get a signature that you gave it to them. The security deposit it not yours, put it in a separate interest bearing account.

Get on repairs right away, or the tenant will punish you when the lease is up and you want to do showings.
1 vote Thank Flag Link Sat Oct 5, 2013
Make sure you have done the math and will make a profit that is worth the time and effort. Chicago taxes only go one way and you need to make sure the HOA fees are low.

I have worked in the area for the past 15 years and work with several quality realtors in Chicago. Our company works directly with Fannie Mae and Ginnie Mae and fund the loans in our name. We aren't waiting around on the big banks to approve the deal. We staff our own underwriting department and get things done quickly. You can call me at (630) 639-1081 and I can give you a preapproval the same day and help you find a quality realtor in the area.

We can do: FHA, Conventional, USDA, VA, HARP, Interest Only, Home Equity, Fixed, and Variable. Find out which product is right for you by calling Brad at (630) 639-1081.

Brad Neumann
Sr. Loan Officer
Mobile Phone: (630) 639-1081
Email: bneumann@myccmortgage.com
3130 Finley Rd. Suite 510C
Downers Grove, IL 60515
0 votes Thank Flag Link Tue Oct 8, 2013
Make sure you and your broker does their due diligence to make sure no rental cap exist and that you can actual place a property for rent in the condo building. There are some building in Chicago that are 100% owner occupied and they want to keep it that way.
0 votes Thank Flag Link Mon Oct 7, 2013
Hi There

I suggest that you conduct your due diligence and make sure that you can rent according to the Condo Association By-Laws, look at the cash flow from the investment and compare it to alternate investment opportunuties in today's Market, and try to find a condo building that is FHA allowable to give you more flexibility when liquidating your investment.
Good Luck!
0 votes Thank Flag Link Mon Oct 7, 2013
Most things have been covered below, but another thing to also look at is what are comp rental units in the area and how does the unit you're looking at compare.. Make sure you can cover your monthly expenses right away and in the future. You should use a realtor that helps both buyers/renters.
0 votes Thank Flag Link Mon Oct 7, 2013
The most important is to know the building you are buying into.

What is the building's rental policy?
Is the board anti-renters?
What is the financial health of the building?
History of special assessments?
Condition of common elements....

Work with a broker familiar with the area!

Best regards,

Ivan Sagel
312.515.7823
ivan@atproperties.com
0 votes Thank Flag Link Mon Oct 7, 2013
Follow the cash and analyse potential risks involved. Chicago downtown/loop is quite competitive, so your leverage is in the initial sales price. Make a plan of your risks and mitigate them, e.g. Negative tenant behavior, loss of income (vacancy loss, historic vac, et al.). Research the trends in your particular area you want to buy, I'm sure there are enough helpful brokers out there to help you find good information. There is demand in downtown/loop, but again, others know that too. Be careful about macro-risks, concerning the overall property market, I don't mean not to invest, however, make sure you have sufficient (at least for the banks) reserves at hand for rainy days. Once you get in trouble with your IS/DS/DSCR, there is no easy way out.
0 votes Thank Flag Link Mon Oct 7, 2013
people have lots of choices between the rental buildings and the condo market.. also you are buying investment property with immediately drops the value of the building. .a catch 22 of the business but the thing is what are all the expenses?
0 votes Thank Flag Link Mon Oct 7, 2013
I have to agree with most of the posts - you must first make sure you can rent the property - assuming this is a condo
You also need to make sure that they maintain a healthy association. Are there, have there been , or will there be any anticipated special assessments. Who was the developer - do they have any pending litigations with this assocaiton or any of their other projects for that matter.
If you are financing the property you need to be aware of how many rentals are already present as this can create an issue with obtaining a new loan.
If you need any help with you financing please feel free to reach out at anytime - my team has a lot of experience financing investments properties.
Sam Sharp
Senior Vice President of Mortgage Lending
ssharp@guaranteedrate.com

http://www.guaranteedrate.com/SamSharp

vCard / Facebook / Twitter / LinkedIn / A+ BBB Rating

o: 773.290.0455 / m: 312.217.4030 / f: 773.516.6056
3940 North Ravenswood , Chicago, IL 60613
NMLS ID: 224518
0 votes Thank Flag Link Mon Oct 7, 2013
Can you afford it?
What is your exit strategy?
Are rentals allowed?
Can you manage the day to day issues that may come up with your tenant?
0 votes Thank Flag Link Mon Oct 7, 2013
N-1 if the associatiom allow to rent the condo , and if there is a future proposal to ban rents in the complex .
There are a lot of biuldings in Downtown now that allo rents in 2013-2014 but proposal to be voting to dont allow after 2015 in milenium park and gold coast
0 votes Thank Flag Link Sun Oct 6, 2013
Please give me a call and i will explain you everything you need to know! Thank you!
0 votes Thank Flag Link Sun Oct 6, 2013
First and foremost, make sure that the building allows rentals. After that, check the condo declarations to make sure that if there is a rental cap, that it is not met already and what the ongoing protocol is for homeowners who are primarily investors. Can you rent out the unit indefinitely or only for a specified amount of time?

Also, find out what fees there are to you and to your potential tenant ( move in / out, rekeying, pet deposits, administrative, etc.).

Now, do the numbers. If you are cash flowing a couple hundred a month after all expenses, then you are in a good spot. Don't expect to make a landslide amount of money monthly. Expect to get your bills paid and make money in equity and growth over time.

I hope this helps. Fell free to call me at 773 972 5333 or email howie@markallenrealty.com to discuss further.

GO BEARS!
0 votes Thank Flag Link Sun Oct 6, 2013
Some condo buildings do not allow rentals and some have rental caps and other restrictions. Some condo buildings charge a lot for a tenant to move in. 1030 n state is one of the worst charging 1K.
You will find that it is almost impossible to find a condo that can even break even cash flow because the taxes and assessments are very high unless you put more than 20% down. The days for getting a good rental deal in the downtown are ended on 2012
0 votes Thank Flag Link Sun Oct 6, 2013
Aside from all what is stated below think about your exit plan. Based on what information is out there, what is the likelihood that your investment will appreciate? Will your investment qualify for financing in the future? Etc
0 votes Thank Flag Link Sun Oct 6, 2013
email me at jmichaels@remax.net and we can discuss the investment
0 votes Thank Flag Link Sat Oct 5, 2013
While the current rental restrictions in a building are the most important the thing you can't really protect yourself from is the possibility that at some future date the board will pass more restrictive rules that will prevent you from renting the unit out. It does happen and then you are hosed.
Web Reference: http://lucidrealty.com
0 votes Thank Flag Link Sat Oct 5, 2013
Yes the below are all outstanding answers. If it's a condo, be sure the association allows rentals and the building is not capped. there are many important details to keep in mind. Your Cash on cash return rules all.
0 votes Thank Flag Link Sat Oct 5, 2013
Make sure rentals are permitted Make sure the building has a good management team and janitor who can find you tenants and assist you any maintenance issues in your unit.

Jack Lewitz
Il real estate specialists
708-309-5334
0 votes Thank Flag Link Sat Oct 5, 2013
Simple,

Your ROI... and the steps to get there.




Sohail A. Salahuddin
Sohail Real Estate Group!
0 votes Thank Flag Link Sat Oct 5, 2013
Purchase price + monthly assessments + taxes = holding costs + rentable rate = determination if good investment or not.

Good luck!
0 votes Thank Flag Link Sat Oct 5, 2013
There are a number of things to consider. Call me 773-914-5309 or email bbiederman@citypointrealty.com.
0 votes Thank Flag Link Sat Oct 5, 2013
Make sure you know the Chicago tenant landlord ordinance and make sure the building allows rentals.
0 votes Thank Flag Link Sat Oct 5, 2013
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