Ready to Rent Out Your Chicago Condo? Here’s What You Need to Know
Let’s face it. Renting out a condo is hard, especially in Chicago’s market. You’re competing against an army of fellow solo renters, not to mention the city’s best property management companies. So it’s not surprising that many prospective renters are so intent on finding tenants to rent out their property that they forget about the other (let’s face it, more tedious) half of the process.
The administrative tasks involving an apartment rental can be a slog, but if you don’t give them your full consideration then you can run into some serious problems. Let’s take a look at each step, so that you can be prepared for the road ahead.
Review Condo Documentation
First, check your documentation to review all the rules and restrictions set by your condo association board. Are you even allowed to rent this property in the first place? What are some of the conditions of doing so? This can be a tricky part of the process, and getting to know members of the board will help you tremendously in the long run. Having someone to turn to with thorny questions (and who can argue your case to the rest of the board) is an advantage that can make or break your rental hopes.
Address Insurance and Tax Considerations
Next, take a look at the various insurance and tax implications of renting out your condo. Do you have the right coverage for your unit? Odds are, your current policy will not extend to your tenants.
As for taxes, make sure that you maintain the proper records for filing your upcoming returns – not only do you want to keep track of expenses, but converting your property into a rental may cause your taxes to increase.
Price Your Unit
How are you going to price your unit? Review the market value rent for apartments like yours to find the right balance of profit and attractiveness. Pricing your unit competitively can make it stand out from those around you, and a slightly lower price can actually make you more money if it leads to a higher occupancy rate.
Lease, Rental Agreement, and Background Checks
In order to prepare for incoming tenants, you will need to draft up a lease and a rental application. There are many templates available online, with varying degrees of formality and extensiveness (not to mention, quality). Take your time, and don’t just grab the first result you find.
You will also need to find a quality service such as Zumper for performing background checks to ensure your prospective tenants have proper credit and are free of any criminal or bankruptcy issues.
Decide How Rent Collection Will Work
This would be quite a problematic step to overlook! But it’s something many people don’t consider until they’ve already got tenants. You want to make it easy for your tenants to make their rent payments, and track every transaction to ensure that you’re collecting the right amounts on time.
Collection software can be obtained for free, but will be limited in features and functionality. Some landlords simply employ everyday money transfer services such as PayPal, Chase QuickPay, or Venmo, but this method requires some extra diligence and double-checking to make sure that all rents are paid on time. Delving into transaction history in these tools may be difficult, so they may not be the best option for someone managing multiple condos, or with troublesome tenants.
Last but not least, make sure you have a good lawyer! You are going to need to have someone review your paperwork, and double check that you’re not missing any key elements that would open you up to risk, or violate local laws. In addition, your lawyer will be a key asset if issues arise in the future with your tenants, your condo board, or the local government.
Consider Getting Some Help
As you can see, managing a rental property is a lot of work, and that’s only the setup phase. You still have to market your property, manage any maintenance work and vendors, deal with tenant issues or delinquency, and manage the day to day duties of a landlord.
But you don’t have to go it alone. Property management services not only remove these headaches, but also help you get the most value out of your apartment. They help you price your unit, market it, enforce rent payments, avoid costly fines, and much much more. Perhaps most importantly, they also save you from the headaches and the hundreds of hours involved with self-management. In many cases, a quality management service will pay for itself, while giving you the ultimate benefit of peace of mind.
If you’d like to find out more about Alto’s property management, check out our services page or contact us today. We’d love to find out how we can help you manage these responsibilities and get the most return from your rental property.