What areas do you recommend in Chicagoland for Rental Condos ?

Question

I Am considering doing cash refinance and will be able to obtain about $140k. Thinking of buying 2 condos, since they are less risk as far as repairs etc. What areas would you recommend in Chicagoland ? With best cash return. I saw some available for around 100k near Loyola University Marine dr. Or would you suggest suburbs ? I would be putting down 40% as down-payment.

Alex Tokmazeyskiy · Answer

Yes, I am ready for them and believe you are right))) HOAs suck, but owning a Multi Unit for past 8 years, there are cons to those as well, like major Roof Repairs, basements leaking, building plumbing issues etc , lawn mowing and snow removal costs and higher taxes, those are to consider as well. In condos you don't have to worry about those.

Michael K. · Answer

@Alex Tokmazeyskiy Hi there, I have a few things to add to that you might find useful. In general, I don't think buying condos is a bad investment strategy, but there are definitely some things you need to watch out for.

1. In a large building with many units it can be very difficult to obtain financing if more than 15% of owners are 60 days or more late on HOA payments (making the building unwarrantable). This is a real problem that I have run into multiple times in just the past year. However, this rule does not apply to 2-4 unit buildings. So make sure you have info about the HOA before closing, otherwise delinquent units could impact your ability to sell the unit.

2. You have to know how much the HOA has in reserves. If they cannot tell you how much they have in reserves then don't buy into their building (I made this mistake and only found out later that the state of the association was a total mess). If the building has a lot of new features and healthy reserves, then that is a great sign and means that you're unlikely to have any special assessments pop up.

3. Smaller buildings have fewer amenities and, as a result, lower HOA fees. Unless the amenities in a building are so good that they justify the higher rent (a result of you needing compensation for the high monthly HOA assessment) then consider looking at smaller buildings with lower assessments.

If you buy into a healthy HOA that is well-managed then investing in condos can be a great strategy, just realize they you will need to stay on top of the happenings in the building and make sure that the HOA stays healthy and on track.

Alex Tokmazeyskiy · Answer

Thanks for sharing that! Very helpful to know! Maybe someone can share something about maybe owning one in the Suburbs !

Victor So · Answer

@Alex Tokmazeyskiy

Hey Alex,

I don’t want to add to the fire… but yeah, HOAs can suck. Haha. I used to have a condo in that area and HOA fees were high. It went from 816 to 956 in a year. But they tend to be pretty high in that area, especially in the high rises. And a lot of those buildings tend to be older, so there can be some hefty special assessment fees. And my HOA was super strict about every little thing especially when it came to rehabs.

Also. In my unit, the previous owner got slapped with a 25K special assessment for the replacement of windows.

There were a lot of other issues too but make sure to do due diligence before investing in condos especially in that area.

Sorry for the “negative” post. Haha I hope someone has some positive condo stories.

Kusal Swarnakar · Answer

i agree with you about Condos specially for investors outside the area. Will Chicago area give positive cash flow?

Scott M. · Answer

There was a thread a few days ago where someone asked for the pro's of condo's and I think all but 1 reply just listed out con's. I like condo's, like anything else have to do your due diligence on the asset.....but I felt bad for the poster looking for pros's and didn't get many. Anyway, hope your thread is better !

Alex Tokmazeyskiy · Answer

Yes, I am ready for them and believe you are right))) HOAs suck, but owning a Multi Unit for past 8 years, there are cons to those as well, like major Roof Repairs, basements leaking, building plumbing issues etc , lawn mowing and snow removal costs and higher taxes, those are to consider as well. In condos you don't have to worry about those.

Scott M. · Answer

Brace yourself for the "condo's/HOA suck" comments : )

What areas do you recommend in Chicagoland for Rental Condos ?

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