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There are a million ways to make money in the United States. Big cities like Chicago, Illinois present a huge portion of these opportunities for savvy investors and job seekers. One industry sector that has become extremely popular for those seeking additional income is real estate. With the right tools and strategy, you can become a highly successful real estate investor.
More specifically, the world of residential rental properties can be incredibly lucrative. Younger generations today are less excited about the prospect of owning a home. They often prefer the flexibility of short-term leases over the long-term commitment of a 20 or 30-year mortgage. Additionally, investing in a home can be very expensive upfront, and some people would rather pay rent than take on a mortgage with a huge down payment.
The residential rental market in Chicago is brimming with opportunities for investors to make money from rental income. However, this is not an easy, get-rich-quick scheme. A lot of research and work is required to set up your business the right way. Here are some tips to help you get started as a successful rental property owner.
Financing the Property
The first obstacle rental property investors face is the cost of a property. You need to determine what kind of rental you want to own. For example, would you prefer a vacation rental or a long-term apartment leasing structure? Are you more interested in a duplex, a single-family home, or a complex with multiple units? Whatever type of property you choose, you will need to finance that purchase. Fortunately, you have several options. You could refinance your current home to take cash out of the equity for a down payment. You could also borrow against that equity with a home equity line of credit. Other options include taking our mortgages from a lender in Chicago. A debt-service coverage ratio loan, for example, is given based on the projected income of the property rather than your personal income. Research your financing options before you commit to a rental property strategy.
Researching Property Value
A good investment requires research. You must determine if the property you want is being sold for a fair price so you can get a strong return on your investment. First, research similar properties nearby to see what amenities they are offering and how much they cost. Then, get in touch with a real estate agent who can help you find more properties that may not be listed everywhere. Always pay for a professional inspection before agreeing to buy a property in case this process reveals serious maintenance issues. It would also help to understand average rental rates in Chicago for the type of property you are buying. The better you understand the property you are buying, the easier it will be to get a good deal.
Improving the Property
Now it is time to get the property ready for tenants. Understanding the needs of renters is important for this step. Do they want an extra room for a home office setup? Is there room for a green space? Can the property’s exterior be more appealing with landscaping improvements? Would installing solar panels appeal to renters who want a smaller impact on the environment? Are there aging appliances that should be replaced with more efficient models? Preparing the property for tenants or guests is crucial if you want to stand out from the competition and keep vacancy rates low.
Hiring Property Managers
This is an optional step that will have a huge impact on your ownership experience. The primary question to ask is this; “Do I want this to be passive income or not?” If you want to do all the logistical work yourself, such as managing tenant screening, responding to all maintenance requests, and marketing the property, then you can handle the property on your own. Just know that it will involve a lot of ongoing work. However, if you want to let this rental property be passive income, then hiring a company dealing with property management in Chicago will be necessary. It will cut into your profits, but it will also significantly lighten the workload of running a rental property.
Build Your Investment Portfolio With Stable Income From Rental Properties
Getting involved in the real estate space in Chicago could be your path to greater wealth. Whether you want to save more for retirement or have more money to lead a comfortable lifestyle, renting out residential properties could be the solution. However, it will require a lot of work, resources, and research to get started on the right foot, so follow these tips to have the greatest chance of success with your residential property investment. If you jump into this strategy without proper planning, you could lose a lot of money or have a hard time turning a profit.