Success with Chicago Condo Rentals?

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Success with Chicago Condo Rentals?

Derek Luttrell
Chicago, IL · Member since 2017 · 231 posts · 124 votes

Hi All, 

I wanted send a beacon out to fellow Chicago investors and ask if anyone has a portfolio of condos within the city, since single family hardly exists out here. I know the popular opinion is that special assessments can wipe out cash flow, not all associations allow renters, association policies can suddenly change, but I successfully house-hack through roommates in my Ukrainian Village condo right now (I'm 25 so for now it feels weird NOT to have roommates), and for my first true investment property I want to stay close to home (no more than 20 minute drive/public transit). 

I have a pre-approval with my lender with stipulations that the building can't be over 50% tenant-occupied, and at least 10% of the monthly HOA dues need to go into reserves. Does anyone reading have a few successfully rented Chicago condos under their belt? The rental market is great in this city, and I'd really like to invest close to home as I love it here and don't see myself leaving anytime soon.

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Daniel F.
Chicago, IL · Member since 2013 · 27 posts · 8 votes
8y

@Derek Luttrell I think it depends on your time horizon. If this is a property you're thinking of buying and holding for the long haul, maybe worthwhile on doing the 15 year route and sacrifice that marginal cash flow you'll get today while building up equity way faster. 

If it's more like a 5 year hold, you need cash today, and think that extra cash flow will help continue a goal in mind of buying more properties, then 30 year maybe not be bad either. 

Point being, a lot of people forget to factor in the equity piece and if you're buying this thing for the long, 15 year isn't a bad idea if at the end of the day your monthly cash flow is marginally different and won't have an impact on your bottom line.

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  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    8y
    Originally posted by @Derek Luttrell:

    @Brie Schmidt tell me if I'm missing something, but even on the 5% down payments and living in one unit, the owner still pays ~$1000+/month themselves (not the best outcome when house hacking), which means that once they move out and rent their unit to a tenant, there's not a whole lot of cash flow opportunity. 

    I'm by no means above living north of Irving Park road a few years from now, but at current prices buying MFHs just doesn't make a whole lot of sense to me. 

    I appreciate this dialogue! I really enjoy soaking up knowledge from local investors. Someone's got to be making money around here. 

     If you want to put $25k down on a $500k property and profit hundreds of dollars a month you can live on the south side.  

    It is all about expectations, the north side of Chicago is not a cash flow market, the south side is. North side is a balanced cash flow / appreciation market. You can't expect to put a small amount down and be cash flowing thousands of dollars a month. 

    Even if not living there you make $300 / mo after 30 years assuming no appreciation you get $108k in cash flow and a $500k free and clear house with a $25k investment.  I don't know what more you expect?

    Like you said, prices are increasing year over year.  I have made $250k in appreciation on my property bought in 2011, $220k on my property bought in 2012, and $165k on my property bought in 2013.  My 2014/2015 purchases are all up about 15%-25% YOY

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  • Eric Finn
    Bolingbrook, IL · Member since 2017 · 5 posts · 0 votes
    8y

    Robert R. from Downers Grove, Illinois

    replied 4 months ago

    Hey Robert. What towns are you purchasing in? I live in Bolingbrook and am looking to buy a couple units in the south suburbs as well.

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  • Beth Heb
    Member since 2018 · 1 post · 0 votes
    8y
    @Derek Luttrell Derek...I purchased a small condo in Lincoln Park as an investment a few years back. The numbers were good and we cash flow about $250/mo. More importantly, I knew the building and had a sense for the condo board, reserves and the overall sentiment towards rentals. Also, I spent a lot of time talking with the property manager and the engineer before locking in the deal. I would love to find more condos like this. There are investor-friendly buildings, but you have to do the research. As a small investor, a condo was a comfortable place to start. One other thought...my first investment was in a pair of parking spaces also in Lincoln Park. These cash flow about $100 per spot. It gave me a very soft launch into investing. Some parking lots work just like condos, where each space is sold, assessed and taxed individually. If the lot is attached to a condo building, you often must own in the building, but not always. Again, just an idea. Many others on BP have a great deal of experience and I have learned so much from reading their posts. In the future, I would like to expand into multi family, but the condo/parking spots have been a nice way to learn.
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