Buy Rental Income Property | Chicago Real Estate Investing

Rental Income Property and Real Estate Investment in Chicago

Why You Should Invest In Chicago

In the city of Chicago, there is a history of shortage in housing inventory. This, in turn, is driving up or increasing the demand for rentals as more and more people are looking for homes or apartments to rent. This increased demand for rentals is a huge opportunity for investors looking to make money through rental income.

Chicago is home to a booming economy and is a great place for young professionals. Chicago's economy is powered by the finance and technology sectors. The city is also the third-largest in the country, and home to the second largest business district in the country. It also is expected to add 200,000 new jobs over the next 30 years, making it an ideal location for investors to earn money through rental properties.

However, there are a lot of reasons why buyers are struggling to find good properties to purchase in the area. One of the biggest factors: bidding wars.

While Chicago is one of the few major cities in the United States where you can find affordable investment properties for sale, the housing market is quite competitive and it is not always easy to purchase a property. The average price of a home in Chicago was $303,000 in the last month, up 10.9% since 2021.

In terms of the rental market, Chicago rentals also are affordable when compared to other major cities. As of 2022, average rents for a one bedroom apartment in Chicago is roughly $1000 per month, two bedroom apartments are more, with an average cost of $1300 a month. This makes Chicago a city that is appealing to renters and a great city to invest in for rental income.

Investing In Chicago: Is It Worth It?

In short, yes. It is a great place to invest in real estate. The city of Chicago has many neighborhoods that are great for investors. There are, in fact, 77 neighborhoods in the city of Chicago where you can buy an investment property. These neighborhoods offer good and even great investment properties and opportunities for investors to consider.

Also, the Chicago real estate market is one of the most affordable in the United States, even with bidding wars. And, while property tax is generally not deductible in Chicago, mortgage interest is tax deductible. So, if you are looking to buy an investment property in Chicago, there are a number of neighborhoods where you can do so.

Because Chicago is a great city to live in, the city has a deep pool of potential renters at all levels of the market. In fact, renters often prefer to live in Chicago for a number of reasons, including career and financial flexibility, to save a down payment, and to avoid repair bills, real estate taxes, and real estate market risk. Renters also want to live in a city where they are able to find work. Chicago is home to 12 Fortune Global 500 companies and 17 Financial Times 500 companies, having the third-largest gross metropolitan product in the United States.

Additionally, the rental market has boomed in Chicago because of the booming tourist industry. The city of Chicago has a range of neighborhoods that are well worth visiting. The city is a place of great charm, culture and beauty. Tourism and hospitality has added thousands of jobs and generated billions of dollars in direct spending by visitors.

How to Invest in Rental Properties

Rentals as a Business

Being a landlord is like running a business and so you need to think in a business-like manner when you are thinking about renting out a property. You need to be able to predict what your profits will be and you must be able to cover your expenses. This includes covering the cost of the property itself, the mortgage payments, repairs, taxes and the like. If you cannot cover these costs, then you are likely to end up losing money in the long term.

Building Types - What Makes a Good Choice

If you are going to buy a property as a landlord, then it is essential that you find the type of building that you, yourself, might want to live in. For example, it might be a bad idea to buy a unique looking building. If you do not want to live in such a building, will prospective tenants want to live there? You want to be thinking about ways to attract tenants to your property.

As part of this process, be thorough with your inspection. For instance, if you are looking at a multi-unit building, don't just look at a representative unit. Rather, view the whole building and inspect all the units. Also make sure you always leave room in your budget for possible vacancies, and the essential building maintenance

Five Basic “Rules” to Buy Chicago Investment Property

As noted earlier, the job market is buoyant in the Chicago area and it is certain that demand for rental property is going to continue to grow. This makes now a great time to invest in rental property in the area.

With that, it is very important that you find the right real estate investment for you. Chicago is a great city to invest in, however, it is not for everyone as you will need to find the right investment that will work for you.

Here are some basic investment rules to consider:

1. Due Diligence

Buying Chicago investment property can be a huge challenge, but it's not only about handling the mortgage repayments. It's about far more than that.

Before you buy an investment property in Chicago, you need to crunch the numbers. You have to make sure that you are investing in a property that will give you a return on your investment. Consider all the costs–from the price of the property and the property taxes, homeowners dues and possible assessment fees to the cost of regular maintenance and marketing or advertising your property to potential tenants. You also want to consider any time that your unit or units might be vacant.

There are many things to think about when it comes to finding a tenant for your property. How will you find or reach potential tenants? What happens if they are late with the rent or miss a payment? What is the cost of making repairs and managing the rental property?

So, make sure you crunch the numbers, and do your homework before taking the plunge.

2. Location - Important Considerations

While the City of Chicago has many neighborhoods, some of which are in higher demand. The best areas to consider investing in are located in close proximity to downtown Chicago.

With that said, you want to consider which parts of town appeal to the people in your target market.

This is a big decision and one that you should make with careful consideration. Make sure you don't let emotional factors cloud your judgment.

3. Avoid Overextending

Buying a house on the best streets is not that easy to execute. So, here is a good rule of thumb: look into the local market to see if the best house on the street is selling and if not, it might be time to look into another street.

It is good to consider or look at buying a house that requires just a few cosmetic changes, such as a new paint job or some new carpet. While you want to buy something that is affordable, you do not necessarily want to buy a house that needs major renovation.

4. The Law of the Land

Landlord tenant law is a complicated topic. Landlord tenant law is a legal term that describes the relationship between the landlord and the tenant. Landlords and tenants have certain rights and responsibilities to each other. Landlords do have the right to ask tenants to leave the property but this is a complicated process.

When signing a lease you want to make sure you follow the law, and do all that you can to avoid getting into a situation where you may need to evict. You don’t want to make any legal mistakes that could result in you getting sued.

5. Chicago Real Estate - The Easiest Place To Put Your Money

You can utilize the Lofty marketplace to discover fractional, tokenized Chicago rental income property, as filtered by Lofty’s fractional marketplace system then tokenized and secured via crypto blockchain technology.

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