All Forum Posts by: Jeff Burdick

I have a multi-unit in a class A neighborhood in Chicago (Lincoln Square - 60625) that I am wrapping up a large rehab on right now. The property is on a remarkable block and the units really are fantastic - we've taken great care in choosing finishes and upgrading many items. The last 2 units are coming online right now and we're suddenly considering AirBnB vs. long term rental. Here's why:

An old friend of mine from the hospitality world has cofounded what I understand is the only "full-service" short-term rental property management company in Chicago and they manage over 100 units - doing everything from price adjusting to marketing to filling to cleaning. I do not believe they are paying your utility bills or ordering maintenance but they are cleaning and turning the property over day after day if necessary. They charge a 29% fee to do this - literally answering every email/message, writing feedback, acting as a concierge services, meeting tenants if necessary (normally doing lockbox/coded entry nowadays), etc.

The numbers his company prepared for me are almost too irresistible. We're talking netting roughly 50% more than I would net with long term tenants. I've run their same numbers considering if I were to property manage it myself, and the numbers are staggering. All said, I have a few detailed questions:

1. Does anyone have experience in running numbers for short term rentals that they can share how to do it?
2. For those of you who are doing this, how are you furnishing your units? How do you figure these costs? Do you rent? Buy? I would think that we would want our furnishings to similarly match the beautiful finishes we used (wherever that sweet spot is) in order to maximize our returns.
3. How are you managing the turnover/cleaning? If you do it, how do you arrange for when you are out of town?

This is a good start to hopefully getting me to a space where I can make an informed choice.

My first deal was a long 3 year house hack flip in Louisville, KY, which was quite successful.  I profited close to $80k!!  I doubled down and closed on a 2 flat in Chicago which was quite expensive ($665k).  Now that I closed all my friends, co-workers, and family are constantly asking about how much the new placed cost, what I am going to put into it, etc.  

As seasoned investors do you disclosure a lot of your financials to co-workers, friends, and family? 

@Mindy Jensen Thanks for the advice! 

So, I bought it with a conventional loan and it is FHA approved. When we bought it, there were special assessment fees associated with it which the seller agreed to pay for (phew..). I'm hoping there aren't many more of those in the years to follow. The complex does allow for rentals after 2 years and there is no wait list. This was a huge relief for us since the other condos we were looking at did have pretty long wait lists.

The only thing is.. the HOA fees are pretty high, which is standard in the Edgewater area of Chicago along the lake where we bought the condo in. Hopefully, if we do rent it out, the rent will cover the PITI plus HOA fees and more. It's right next to Loyola University so there shouldn't be much difficulty in getting the United rented.

And I will definitely try to get on the board! 

 Yes - the basement is actually an entire unit.

@Nelson Leal,

IL has a State tax rate of 3.75%. 

Cleveland, you'll be looking at a graduated state rate plus a city tax of 2$
Ohio's tax rates are listed here: http://www.tax.ohio.gov/ohio_individual/individual/annual_tax_rates.aspx

Jeff,

Our HELOC is evaluated annually. SO if the situation you described happened the HELOC would be adjusted the following year and corrected. I would imagine, that if your limit dropped below the amount that you had out they would call that portion due immediately, however, it would be up to the lender and the terms of the HELOC that you signed.

Jeff V