When I began selling real estate in Chicago in the early 1990’s, purchasing an investment property usually meant buying a two flat or similar multi-unit building and renting out the apartments. Sometimes my buyers wanted a live/rent situation wherein they occupied one of the units and leased the remaining ones. Included in this type of investment was a considerable amount of time spent on maintaining a property. Of course, landlords could hire a company to do this for them, but most companies only managed large portfolios.
The practice of buying mult-unit buildings for investment remains largely unchanged in 2008. There has been an additional trending in the past few years however, that opens the options for investors who want a limited role in the maintenance of properties or for those who have limited resources and need to start investing on a smaller scale: Purchasing units in high rise condominiums. With this type of rental unit, investors can instruct the tenant to call building maintenance on staff for minor maintenance or lock out service. The financial responsibility of large ticket items such as new air conditioning condensors or a new roof are paid for by the association through the monthly assessment or, if funds are not available, a special assessment shared by all the homeowners.
I am in the latter category. Several years ago, I began investing in lake front condominiums near universities and have been blessed with wonderful tenants. Since my time is largely devoted to my real estate career, this provides an excellent way for me do the “let someone else pay my mortgage” thing while building equity and still never having to personally fix a stuck window, leaky toilet or open a door when a tenant gets locked out.
Any buyer interested in investing in income property should weigh the options of a live/rent home (you are always available to your tenant), a multi unit building in which you are not an occupant but will be expected to maintain the structure and units, and the convenience of investing in a high rise.
Should you choose the high rise route, here are some suggestions:
- Choose a location where potential renters are looking for property. These locations include near a university, hospital or major city attraction like the lake.
- Read the condominium documents, rules and regulations carefully. You must choose a building where tenancy is not prohibited nor projected to be in the near future.
- Choose a building with ample parking.
- Choose a building near public transportation.
- Choose a building with a good maintenance staff and on site management.
- Before investing, ask yourself if you would want to live there. You will get a more dependable tenant and the property will have a greater likelihood of rising in value if it is well maintained not only by the resident homeowners, but absentee owners as well.
Click here for a link to an overview of high rise buildings in Chicago.
Of course, two flats, three flats, and their ilk will always be popular. Before purchasing however, ask these questions:
- In the case of a live/rent situation: “Do I want to live in the same building as my tenant?” Remember that you will always be on call.
- In the case of a multi unit building in which you do not occupy one of the units: “Am I prepared to maintain the building on my own?” The maintenance not only will emcompass a leaking roof in need of repair, but a leaky toilet as well!
- If it is a large multi unit, or you are not the home improvement type, investigate management compaies. Make absouletly clear the possibility of retaining the services of a cost effective, reliable property manager.
Click herefor an overview of Chicago neighborhoods. Knowing the neighborhoods is a first step to wisely choosing multi unit investment.
IMPORTANT NOTE: Whether you choose to start small or dive right into a multi-unit building, ALL landlord/tenant relationships in Chicago are governed by
My featured listing for the day is not in a high rise, but is near a university and would be ideal for an investor. 6528 N. Glenwood, #2 is located mere blocks from Lake Michigan, the EL, and Loyola University…and yes, it has garage parking!