Real estate has for long been used as a secure form of investment by those looking to hedge their funds against uncertainty. The boom is also attributed to the fact that most banks are quick to finance individuals looking to own homes. This article takes an exploratory look at the condominium market. It expounds on the options that an investor has when it comes to making money out of Chicago condo rentals.
Buying a condo and opting to rent it out is an almost certain way to earn a steady supply of income. However, a number of variables will determine when you get to break even or if the investment is a white elephant. To establish the economic feasibility of your investment prospect, there are numerous calculations that you ought to make.
To begin with, some of the things to look at include insurance costs, maintenance expenses and taxes against the projected annual rental income. These costs are liabilities and are poised to eat into your profit, if any. Other expenses to bear in mind include legal assistance when carrying out evictions and advertising. It is important to note that in US law, both tenants and landlords have their rights.
If you are buying your property straight up in cash, the only thing you will have to worry about are the aforementioned costs. However, it is an all different ball game for those financing their ownership through mortgages. For instance, there is interest to think about. The margins that most banks give are pretty much the same across the board.
A mortgage is poised to be a headache to work with as you will have to use your rental income to service it over a length of time. If the projected cash flow from your condo appears too little, you might want to hold off on purchasing it. Remember interest always rises with an increase in repayment time.
It is only advisable to apply for a mortgage if one has the means to finance between a quarter and a half of the total amount upfront. This helps lower the repayment window and amount. The general consensus in loan financed investing is that if the expected cash flow is not negative, the investment is viable.
Before you finance your investment, you might want to find out if there will be any hidden fees during your period of ownership. Unforeseen charges usually come from assessment and association fees. Assessment charges usually cover shared areas within the condo compound. This includes garage maintenance, building improvements in the exterior section, landscaping, parking lot, hallways and the main lobby.
The final major thing to look at is location. You want to purchase your property in an area that has good demand for rental space. Fortunately, most of the places in Chicago are good options. The area has a wide range of clientele, with many of them being college students and working class people. As long as you do your research patiently prior to purchasing, you should have nothing to worry about.
Buying a condo and opting to rent it out is an almost certain way to earn a steady supply of income. However, a number of variables will determine when you get to break even or if the investment is a white elephant. To establish the economic feasibility of your investment prospect, there are numerous calculations that you ought to make.
To begin with, some of the things to look at include insurance costs, maintenance expenses and taxes against the projected annual rental income. These costs are liabilities and are poised to eat into your profit, if any. Other expenses to bear in mind include legal assistance when carrying out evictions and advertising. It is important to note that in US law, both tenants and landlords have their rights.
If you are buying your property straight up in cash, the only thing you will have to worry about are the aforementioned costs. However, it is an all different ball game for those financing their ownership through mortgages. For instance, there is interest to think about. The margins that most banks give are pretty much the same across the board.
A mortgage is poised to be a headache to work with as you will have to use your rental income to service it over a length of time. If the projected cash flow from your condo appears too little, you might want to hold off on purchasing it. Remember interest always rises with an increase in repayment time.
It is only advisable to apply for a mortgage if one has the means to finance between a quarter and a half of the total amount upfront. This helps lower the repayment window and amount. The general consensus in loan financed investing is that if the expected cash flow is not negative, the investment is viable.
Before you finance your investment, you might want to find out if there will be any hidden fees during your period of ownership. Unforeseen charges usually come from assessment and association fees. Assessment charges usually cover shared areas within the condo compound. This includes garage maintenance, building improvements in the exterior section, landscaping, parking lot, hallways and the main lobby.
The final major thing to look at is location. You want to purchase your property in an area that has good demand for rental space. Fortunately, most of the places in Chicago are good options. The area has a wide range of clientele, with many of them being college students and working class people. As long as you do your research patiently prior to purchasing, you should have nothing to worry about.
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Get a summary of important factors to consider before choosing a holiday accommodation option and more information about affordable Chicago condo rentals at http://www.residenceontheavenue.com now.
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