Here are tips on how to find condos in Chicago to rent out. Also included are tips on applying for a mortgage and the landlord rules to know.
Finding Condos to Rent Out
With rents rising and prices down significantly in the past few years, more and more people are considering buying condos to rent out. However, finding condos that you can rent out takes a little more research than you might think.
Just because a condo currently has units that are rented out doesn’t mean that you can purchase a unit in that building and rent it out. 260 E Chestnut has rentals, but new condo owners are now prohibited from renting out their units. The Pinnacle Chicago has rentals, but when I checked earlier this year was at its limit for rentals.
Some buildings such as 860 & 880 N Lake Shore Drive (a co-op) limit rentals to a maximum of 2 years while you own the unit.
If you’re thinking of buying a condo in Chicago to rent out, call us at 773-793-4516 or email us. We can help you identify where there are condos for sale that meet your criteria and can be rented out.
Getting a Mortgage for Your First Rental Property
If you’ve never owned a rental property before, but are thinking of buying one, you should first talk with a mortgage consultant. Here are 3 tips on what to expect.
1. You’ll probably need a down payment of at least 20%.
2. The interest rate will probably be an extra 1/4 point (0.25%) to 1/2 point (0.5%) higher for a rental property than an owner-occupied home. So, if you qualify for a 4.0% owner-occupied mortgage, you can probably get a mortgage for a rental property between 4.25% and 4.5%.
3. If you don’t currently have any rental properties, the lender may not consider any potential rental income when qualifying you. You may need to qualify for the mortgage with your current income. After you’ve had a rental property for a year, the lender may let your apply around 70% of the rental income to your income. Until then your current home’s equity is a possible resource.
There are different mortgages for rental properties. So you should talk with a mortgage consultant who has access to a variety of mortgage products. If you would like the names of some reputable mortgage consultants, call us at 773.793.4516 or email us! We get no fees for mortgage referrals.
Know the Rules for Being a Landlord in Chicago
Residential rentals are highly regulated in Chicago. A small mistake can cost you thousands of dollars. Read the City of Chicago Residential Landlord and Tenant Ordinance. If you have any questions, consult a real estate attorney!
Call us at 773-793-4516 or email us.