percentage on rentals in chicago

7 Replies

@Kevin Kim - I am not exactly sure I understand your question?  

Some investors use a couple of rules of thumb like the 1% / 2% rules which are very hard to find in Chicago.  This means if you buy a property for $100k it should rent for 1% of that or $1k.

Another percent rule I see people use is the 50% rule which basically says half your rental income should go towards expenses.

You can put them both in the search box and find a lot of discussions on them.

@Kevin Kim there are a lot of factors on whether the 50% rule works or not. A lot of my buildings run higher than 50%, especially if there are central boilers and/or hot water heaters. The main thing I look for is which utilities are paid for by the tenant versus by the land lord. 

@Kevin Kim

The percentage numbers are all over the map. In some cases it's right on and others there way off. I don't use the 1%, 2%, 50%, 70% rule or other percentage rules. Use them as guides only and use actual numbers for better accuracy. I do not invest in the city, but I do invest in the north and northwest suburbs. To answer your question, if I calculate my numbers for my SFH rentals 50% for expenses are high. On the multiple units it's pretty close, but again try to use actual numbers.

Use the BiggerPockets calculator and feel free to post the numbers on here with specific questions per property. The broad percent rules aren't really accurate. As mentioned above whether building is on a boiler (you pay utilities) or all separately metered makes a big difference. Also the price point of the rentals. Your expense percent is much higher on $900 units vs $1500 units.