New STR investor in Chicago

11 Replies

Hey,

I'm Jim.  I'm 31 and work in data and analysis at an advertising agency.  I'm new-ish to the real estate investment game.  I live on the north side of Chicago with my wife and son.

I've been diving into strategies around innovative short-term rental investing (airbnb, VRBO) and trying to investigate whether a lease-ro-STR model can work in Chicago. Running the numbers on STRs in Chicago, it seems like there is an opportunity to generate strong cashflow with minimal upfront investment by using this strategy, but I'm curious if anyone has on-the-ground experience with this type of model.

Given all the red tape from HOAs and the general unwillingness of the average landlord to agree to a sublet clause in a lease, I'm particularly interested if anyone in the Chicagoland area (or any other metro really) has experience finding amenable landlords or owners who would be open to this type of rental agreement.

Thanks for reading!  Have a nice day.

-Jim

@Jim Ostler This question gets asked from time to time.  The general answer to your question is that you have to contact about 20-30 landlords before 1 will go for your offer.  You'll need to sign a lease and furnish it yourself.  You'll need to pay the utilities and provide cable and internet.  You'll need to clean it between occupancies.  When your lease is over the landlord won't renew your lease.  He may offer to buy the furniture and appliances you bought, or he may not.  He'll do the same thing you are wanting to do.

I have 22 furnished rentals with 82 beds in this town.  I just rent to contractors.  They work on those large erections you see at a petrochemical refinery and associated nitrogen fertilizer facility.  Welders, pipefitters, electricians, boilermakers, instrumentation, insulators, iron workers, crane crews, pipeline crews, scaffold builders plus their management.

Find a niche and exploit it.

@Jim Ostler - I know quite a few people who make very good money doing this. Paul is right. You will hear a lot of nos. But the yeses may be worth it. If you're looking to earn some extra capital on the side and want to only spend $3k-$5k furnishing a place as opposed to $30k-$50k rehabing one, I think this is a great option. 

STR are very volatile. In the good months, you may make $1,000-$2,000+ above the rent. However, in slower months you may be breaking even.

If you do want to dive into this, I would recommend taking Brian Page's AirBnb Formula class. It cost a couple hundred bucks, but well worth it if you really do want to make the plunge. 

@Jim Ostler

We are currently developing our portfolio in the Chicagoland area, as previous responses have said finding owners isn’t the easiest task but most owners who are up for this allow you to do this with multiple properties. I disagree with the suggestion that the owner will just do it on their own because this isn’t as easy as most think it is. Feel free to send me a message and we can discuss some options for you.

Happy Hosting

Your strategy is interesting.  But I prefer to own the real  estate.  In the long run, you pay down your properties, they usually appreciate* and rents go up over time.  

*not 2009-2011...

Hi Jim, the landlords are out there and I would suggest focusing on buildings that are newly built or rehabbed and are in the very early stages of pre-leasing. It is usually best to stay away from big developments that have large property management companies attached, they are almost always a "no" but will give you the runaround for a week or so while they ask their manager. Your direction ongoing for multiple properties is great, this will keep doors open with the smaller, motivated landlords. Best of luck

I do this type of model in Chicago. I currently have 6 units that I lease and sublease out.

I agree with @Account Closed that they would want to do it them selves. I have about 10 clients that hire me because they do not want to do it them selves.

@Jim Ostler thanks for starting the thread! and I do think that STR's can provide strong cash flow, I have many clients that are exploring this avenue. I think the biggest advantage is being the owner. There are a lot of people like @Paul Sandhu mentioned, making calls to owners and agents to lease and re-lease or sublease these properties, and there are management companies as well that can assist with furnishing, eys and turning it over for cleaning between stays. but again I think that owning the building, make this model more obtainable and profitable. 


@Craig Curelop Thanks for responding. I agree it seems like an uphill battle to get someone to agree to it, but I'm hopeful that once the right owner sees the mutual benefit, we could make it work with multiple properties. Thanks for the reco on Brian Page's class.

@Account Closed That's awesome. I'd be really curious to know what areas you're focused in, what your relationship with the manager/ owner/ other tenants in the building is like, and your cashflow numbers (if you'd be willing to share obviously).

Originally posted by @Jim Ostler :

Hey,

I'm Jim.  I'm 31 and work in data and analysis at an advertising agency.  I'm new-ish to the real estate investment game.  I live on the north side of Chicago with my wife and son.

I've been diving into strategies around innovative short-term rental investing (airbnb, VRBO) and trying to investigate whether a lease-ro-STR model can work in Chicago. Running the numbers on STRs in Chicago, it seems like there is an opportunity to generate strong cashflow with minimal upfront investment by using this strategy, but I'm curious if anyone has on-the-ground experience with this type of model.

Given all the red tape from HOAs and the general unwillingness of the average landlord to agree to a sublet clause in a lease, I'm particularly interested if anyone in the Chicagoland area (or any other metro really) has experience finding amenable landlords or owners who would be open to this type of rental agreement.

Thanks for reading!  Have a nice day.

-Jim

 Hey Jim, there are some people on here who do a lot of short term rentals and do well with them.  I'm pretty sure they own their own properties though.