Category

Agents

When to Appeal Your Property Tax Assessment

Chicago Real Estate and Five Major Trends for 2021

By | Agents, brokers, home buying, Property Management, real estate, Real Estate Investment

Finance Guru’s Five Real Estate Trends for 2021

Dave Ramsey is a standout among media finance coaches. It’s hard to disagree with his brand of commonsensical counsel that eschews shortcuts and paths to riches that depend on newly concocted strategies. Chicago real estate investors, potential homeowners, devoted readers and listeners who rely on his consistently risk-averse advice learn to avoid high-interest debt while building a solid financial base—a footing typically anchored by the equity most real estate investors and homeowners build through their greatest investment, their home.

real estate agent tax deductions

As the old year came to a close, Ramsey’s website laid down five trends that are likely to emerge in the coming year. Chicago homeowners and investors who have been tracking the national real estate crosscurrents would not have been surprised by any of the five—but would likely be reassured by the continuity they exhibit:

  1. In the coming year, inventories of homes for sale will continue to be thin. As a result, buyers may need to be more flexible than usual in the features and locations they can insist upon—while sellers may find themselves increasingly in the driver’s seat.
  2. Prices should continue to rise, which would make the conservative ‘Ramsey Rule’ (house payments should not exceed 25% of take-home pay) difficult to follow, were it not for—
  3. The continuation of ‘nice and low’ mortgage interest rates, which markedly moderates the effect of the first two trends.
  4. Online and virtual services will continue to expand what you can accomplish via mouse-clicks rather than actual, in-person activity. Ramsey does have a warning for sellers about the advisability of resorting to cut-rate virtual services: “Your home is your biggest asset, and you get what you pay for!”
  5. Likewise, increasingly popular “Risky Buying Options” (like down payment loans or overly expensive rent-to-own offers) rate his one-word review: “beware.”

The Ramsey vision for 2021 is also in line with a projection voiced by government-sponsored Freddie Mac—continuing price rises make a real estate market crash unlikely. Both foresee that sellers in previously less-popular neighborhoods can expect an uptick in buyer interest.

When future trends are continuations of those already in evidence, it’s not particularly earthshaking. More beneficial is the final Ramsey note on how to take control of the trends: “Partner with a top-notch professional real estate agent.

We couldn’t agree more!      

Ready to learn how Lofty Real Estate can help you with your investment properties?  Let’s Chat!

SCHEDULE A CHAT

or call

(844) 355-6389

sell real estate

Looking Back: How did 2020 Fare for Real Estate?

By | Agents, brokers, home buying, Property Management, real estate, Real Estate Investment

New Year’s Retrospective Cheers Chicago Real Estate Watchers

Gather ‘round, people: it’s The Year in Review time again—the week when columnists and TV talking heads line up to chatter and lament over the year’s record-shattering advances and failures. From Washington to Hollywood, Wall Street to Silicon Valley, 2020 provided as rich a trove of talking points as any year in memory.

how to rent my property chicago

Closer to home, for Chicago homeowners and investors, the year in real estate was no exception. When news of COVID-19 first broke, it looked as if the pandemic’s spread might claim Chicago real estate as an early casualty. Yet, despite the persistence of distressing developments in a host of other areas, local real estate watchers watched a much different picture being painted across the nation.

Here’s a selection of a half dozen highlights from The Year that Was in U.S. real estate:

  • The complete numbers aren’t in yet, but as of October, existing-home sales grew by a “spectacular 26.6% compared with last year” (according to reuters.com).
  • 2020 ends the year on track to register 102 straight months of year-over-year median home price increases.
  • For house flippers, the median gross profit per flip increased to its highest in two decades—$73,766—according to ATTOM Data Solutions.
  • The year ends with pending home sales up 20%, buyer traffic up 32%, and mortgage applications up 27% over 2019—signals that, according to NAR Chief Economist Lawrence Yun, “…this winter may be the best ever for the housing market.”
  • By October, median existing-home prices had risen 15.5% compared with a year ago.
  • In a reversal of past age groups’ preferences, 55% of millennials (they outnumber all other generations) are not only stock market skeptics but “are now interested in investing in real estate,” according to realwealthnetwork.com.

For Chicago real estate watchers, those are results that justify putting a bottle of the bubbly in the fridge to chill for seeing in the New Year. And for all our Chicago neighbors, here’s hoping 2021 can hold a candle to this year, real estate-wise—and that it’s a whole lot better where everything else is concerned!

Looking to invest, purchase, sell, or need a property manager? Give us a shout to learn what the Lofty team can do for you.

SCHEDULE A CHAT

or call

(844) 355-6389

Lofty Real Estate saves you money

Motley Fool Recommends a “Drawback” for Chicago Investors

By | Agents, brokers, Property Management, real estate, Real Estate Investment

Investors Benefit from this “Drawback”

Ever since its founding nearly 30 years ago, investors have been entertained and educated by The Motley Fool—the financial and investing advice company known for its good-humored “foolish take” on stock market matters. The firm started out by publishing a run-of-the-mill newsletter but burst into national prominence through a series of creative April Fool’s messages hyping a fictitious sewage-disposal company’s stock. The series mercilessly mocked penny stock promotions.

Through the years, the company’s output has garnered both champions and detractors. Nevertheless, through thick and thin, the Fool has retained its light-hearted tone.

When to Appeal Your Property Tax Assessment

Real estate investing has long been one of its central topics, even generating a specialized sub-brand called millionacres. Chicago investors who have checked in from time to time on this site have read answers to topics like “Is Real Estate a Good Investment?” (“The short answer is ‘yes’”) and “How to Invest in Real Estate” (there are “dozens of paths”).

Their research can yield solid nuggets that Chicago investors find valuable—like a Federal Reserve paper that shows real estate has historically generated rates of return comparable to stocks and equities but with much lower volatility.

In the same discussion promoting real estate as a “core pillar” of any investment portfolio is a typically “foolish” (and startling) idea—that real estate investments have a hidden benefit: illiquidity!  Normally, the lack of liquidity—that is, that it takes time and effort to turn Chicago real estate investments into cash—is listed as a major drawback. Whereas a Wall Street stock investment can be easily sold at a moment’s notice, the opposite is true for real estate. But the Fools take the opposite point of view—and they have a good point. The financial barriers that are built into real estate investments practically force a long-term perspective. They prevent decisions made in haste, based on fear or greed—thus keeping panicky investors from becoming their own worst enemy. The upshot is to instill real estate investments with “the most powerful wealth-building tool ever imagined: compounded annual returns.”

Chicago real estate offers strategic wealth-building possibilities for end-of-year investors. Call us for more on the current opportunities!

SCHEDULE A CHAT

or call

(844) 355-6389

Buying Chicago Investment Properties

Chicago Rental Properties are Dual-Track Investments

By | Agents, brokers, Property Managemnt, Real Estate Investment

Chicago Rental Properties Have Multiple Growth Opportunities

Chicago rental properties can bring their owners substantial investment income at the same time they are quietly building equity. It sounds clever—and it is clever, as many legendary titans of industry have pointed out.

Nineteenth-century millionaire-philanthropist Andrew Carnegie’s “Ninety percent of all millionaires become so through owning real estate” is typical.

More recently is this quote from wealth-creation expert Robert Kyosaki, author of the mega-bestseller, Rich Dad, Poor Dad:

If you don’t like real estate, all you have to do is make hamburgers, build a business around that hamburger, and franchise it.”

Kyosaki’s sly observation lets us draw our own conclusions about the relative likelihood of becoming a one-in-a-billion entrepreneurial superstar like McDonald’s Ray Kroc…versus choosing a canny real estate investment!

That’s not to say that the road to riches is a simple one-step process—especially when the chosen strategy includes actively managing a rental property.  For Chicago rentals properties to maximize cash flow in addition to their underlying equity growth, the original purchase needs to be made in a market-wise manner—then followed with managerial skill.

Lofty Real Estate property managers and brokers are here to help clients identify and acquire the Chicago property that fits their investment objectives—and right now, Chicago has a number you will probably find worth investigating.

Despite the latest pandemic-related precautionary measures, it’s still possible to explore the current offerings while maintaining maximum safety.

Want to learn more about investing in Chicago rental properties? Let’s Chat!

SCHEDULE A CHAT

or call

(844) 355-6389

How Seasonal Shopping Events Support Chicago Homeowners

By | Agents, brokers, home buyer, Neighborhood Guides, real estate, Real Estate Investment

With Thanksgiving Day gatherings behind us, this year’s Chicago holiday shopping action re-focused on the Black Friday sales phenomenon. Early reports were encouraging—but confirmed what Chicago businesspeople expected: a substantial tilt to home-based shopping.

Chicago Property Management

CNBC’s initial late-night observation was that bargain hunters were ringing up record online sales. This was a result that had been foreseen by retailers, who had prepared for the reluctance consumers might show to in-person shopping.

Even so, the National Retail Federation had projected that this year’s holiday sales would grow by somewhere between 3.6%-5.2%. If that proves accurate, sales will exceed averages reached during the previous five holiday seasons—a shot of good economic news for this seesawing (some would say, ‘whipsawing’) year.

At least as significant for Chicago businesses was Black Friday’s weekend successor—Small Business Saturday—which USA Today called “crucial” for myriads of local U.S. establishments. Many local Chicago businesspeople would probably agree, having spent most of 2020 battling spikes in COVID-19 and the strictures aimed at curbing its spread. For the many Chicago small businesses who succeeded in improving their online sales functionality, this week’s Cyber Monday looked to possibly match the national projections, which were widely expected to set sales records of their own.

Much of the media’s coverage urging patronage of local businesses emphasized the altruistic nature of “shopping local”—but from a local homeowner’s perspective, doing so is equally self-serving. Real estate’s “location, location, location” exhortation includes the attractiveness of the community—which is instantly recognizable by visitors in the energy and vitality on display through its local commercial outlets. That activity attracts further investment—or not. And the whole package winds up being reflected in property values—not just in its commercial sector, but in the residential community surrounding it. Area homeowners who make a point of patronizing our own Chicago merchants don’t just keep their neighbors and neighborhoods humming—they assure that local properties will see their values continue to advance in the years ahead.

For all your own Chicago real estate dealings, do give Lofty a call!

SCHEDULE A CHAT

or call

(844) 355-6389

How to be a better real estate agent

3 Things Investors Must Analyze When Buying A Rental Property

By | Agents, brokers, Property Management, real estate, Real Estate Investment

Thinking about investing in residential real estate? Maybe you already own a few residential properties and you are looking to expand? You may or may not already know, there is a lot to consider when determining what kind of property will make an ideal candidate as a rental property. It is important to analyze every property you are considering as an investment; not doing so can be a costly mistake. To help you make the best investment, we have broken down what makes a great rental property.

  1. Crunch the Numbers

When you are digesting all the factors of a property to determine whether it would be a good rental, it does not stop at just the math. But an investment can start or not start depending on the math, so be sure to break everything down and analyze all the numbers as you work towards your decision.

Rent-to-Value Ratio

First and foremost, what is the rent-to-value ratio ratio of the property? Rent-to-value is one year of rent divided by the price of the property gives you the gross rent yield. There is not a hard and fast rule for where the gross rent yield should be, but typically they fall between 3 and 8 percent, depending on the location of the property. Usually the better investment is the property that has the higher rent yield. It is not an absolute law of an investment’s success, but knowing a property’s rent-to-value ratio will help determine which properties may be better suited as rental properties over others.

Cash Flow

Another factor to think about when considering the viability of a property as a rental is its cash flow. This is the monthly rent minus all expenses associated with the property; including mortgage, taxes, insurance, HOA dues, maintenance, vacancies, etc. Once everything is calculated, are you happy with the number you have? If it is much lower than you would like, maybe you should consider a different property.

best property management chicago
  1. Location, Location, Location

Real estate professionals love to say that, but it is true! Location is huge factor when it comes to investing in real estate. Several factors in regards to the property’s location will determine whether your investment is fruitful, so it is crucial to consider all of them and to do your research.

Already Popular Or Still Rising

What is the neighborhood like? Is it well-established, up-and-coming, something else entirely? Established neighborhoods are a great place invest; property values are usually stable so it is less risky of an investment. However, that can also make it more difficult to make money. If the initial cost of the property is higher, there is less room for profit.

On the other hand, though it is more risky, investing in an up-and-coming neighborhood may give you more room for profit. You may be able to get a property at a lower cost, and though initially profits may be lower, as the neighborhood becomes more established, property values and rent prices tend to increase. The payoff can be high, but there is also more risk involved.

Some neighborhoods can take years to become more established and some others never take off as expected. If possible, find out if any building permits were issued nearby? Are there any new businesses moving in or future developments planned? This will help give you an idea of the speed of growth in the neighborhood. To ensure that you make the best investment for you, be diligent in your research and consider talking your plans over with an expert who is well-versed in neighborhood growth and real estate trends.

Education Is So Important

The neighborhood schools may not be important to every potential tenant, but for the ones who find it important, it can be a major importance. The quality of the schools in the area are often a top factor when they choose where to live. Check out the quality of not only the public schools in the area of the property you are considering but also any nearby private schools.

Neighborhood Watch

Nobody wants to live in an area that is a hotbed for criminal activity. The crime rate will play a major role in not only the value of the property you are considering but also the ease in which you will find tenants. You should be able to acquire updated crime statistics for the area you are considering. Pay close attention to violent crimes, vandalism, and theft, and look for any signs of increase or slowdown in criminal activity.

best property management chicago
  1. The Property

Now that you have considered the location and the dollars and sense of the investment, let us now think about the physical property. It is not as cut-and-dry as just choosing a property that looks nice and is in your prices range; there are several factors to consider.

What Type of Property is It?

There are many different types of residential properties available so one of the first things you need to decide is what type of property are you looking for. A single-family home or a condominium is great for any investor, but if you are a first time or beginning investor they are the ideal property.

Single-family homes are nice because they tend to attract long-term tenants such as young families or couples looking to start a family, so you will not have to worry as much about vacancy. Condominiums are nice for a beginner because they tend to be low maintenance. Owners are responsible for interior repairs; this leaves any exterior repairs as the responsibility of the Home Owners Association.

However, that can bring about another issue. HOA fees can be high so it is important to consider those into your figures when determining the potential value of the investment. Also, make sure you look into the financial health of the HOA because you do not want to end up footing the bills for a struggling HOA.

If you are a more experienced investor, you may be thinking about a multi-unit investment. This type of property has multiple tenants in one building and can range from a duplex to an apartment building and anything in between. With this type of property, tenants could solely occupy the units or you could live in one unit with tenants occupying the remaining units. Living in one of the unit could be a beneficial way for you to save money personally and possibly save money on fees involved in financing a multi-unit property.

Whether you are a beginner or an experienced investor, meeting with a real estate professional to discuss what type of property is ideal for your individual situation will help you make the best possible investment.

Skip the Fixer Upper

Many people like to purchase property that needs moderate to major amounts of work, thinking that they can make a lot of money. Properties that require a lot of work can be bought at significantly lower price, but they are best avoided by those new to investing in real estate. Unfortunately, many people end up spending more money than they planned and do not make the kind of money they expected. Do not get us wrong here, there are people that do this and are very successful at it. We have found that, in the beginning, it is better to leave the fixer uppers to those that already do it well.

There is a lot to consider when purchasing a residential property as an investment and it can require a certain amount of legwork to determine what is best for you. Consulting an expert in the field will help take some of the work out of your hands. Here at Lofty, we do just that—we have the experience and the knowledge at our fingertips to help relieve you of the extra work and help you make the right real estate investment choices. Talk to us and see how we can help you live the life you deserve.

Speak with one of our experts to find out how we can supercharge your investment.

SCHEDULE A CHAT

or call

(844) 355-6389

Join Lofty the 100% commission real estate company

What Does An Amazing Property Management Company Do?

By | Agents, brokers, Property Management, real estate, Real Estate Investment

Imagine a world where you never have to worry about finding the right tenants, collecting rent, and getting a plumbing call in the middle of the night on one or many of your investment properties. Well, it is possible with the right property management company. Here are a few things an amazing property management company can do for you...

Market Value

Property managers start by evaluating your property. After performing a detailed inspection of the interior and exterior of your property, which includes taking photos and/or videos of the property, a great property manager can make suggestions for repairs both cosmetic and necessary—repairs that can increase the value of your property and make it more appealing to prospective tenants.

Next, a property manager will seek to determine the fair market rate for rentals. They conduct a comprehensive comparison study of the rentals in your area, to discover the amount of rent that is considered “fair market value” in your area, for your property type and features.

When it is time to search for a new tenant, they will handle the heavy lifting of the leasing process. Whether they show the property individually, list it on the MLS with a lockbox, or some combination of both, a great property manager will market your listing in unique ways to find your ideal renters out of many potential renters.

best real estate training

Creative Marketing

Carrying a great deal of experience when it comes to marketing, a great property management company can easily design effective ads that will really get perspective tenants attention. Utilizing professional photography and graphic design, a great property manager can prepare print ads, digital ads and network your property with other realtors.

As the calls from prospective tenants start rolling in, they can provide additional information about the property, with a keen sense of how to answer questions you may have had difficulty with on your own. When it is time to show the property to prospective tenants, a great property manager will handle it without hesitation—even during “off” hours like regular business operating times when you may be occupied with other responsibilities.

Tenant Selection

A great property management company is likely already outfitted to present your prospective tenants with application materials that are in line with federal and local housing laws. This means that leasing is sound, safe and secure with a great property manager.

Tenants expect to be required to clear certain verifications in order to be truly eligible to rent from you. Professional property managers know this and are well-prepared to run the necessary background checks to ensure that your prospective tenants are qualified. They will meet with the prospective renters on your behalf and collect the necessary background information to run the verifications.

Leasing

Even if you already have a lease to use, a great property manager is sure to have a lease ready-to-go that is at least as secure and safe as yours, and can set up the lease agreement within all the specific local, state and federal guidelines. They will go over the lease agreement with the tenants to ensure that the terms are well understood—especially addressing the lease due date payment and any fees associated with late payments. Property managers also can ensure that all the instruments have been executed correctly and all signatures are received. When the lease is in place, the property manager will work with your new tenant to secure a move-in date.

Moving In

Great property managers will always seek to perform a comprehensive move-in walkthrough of your property with your new tenants. This is an outstanding way to manage expectations and establish accountability. By making careful notes, a great property manager will learn and share with both parties the condition of the property at the time of move-in. The walkthrough provides an arena for your new tenant to voice concerns and request maintenance on items you may have overlooked or forgotten, while you are well-informed of the condition of your property at the time of the move-in. This can be invaluable in the event of difficulty down the line.

Lease Payment Collection

You can count on your property manager to collect the rent, address late payments and collect late fees on your behalf. In the event things take a turn for the worse, they will even send out demand letters, quit and eviction notices.

Provide Legal Support

Expert property managers are equipped to supply and manage all necessary legal forms and documents for eviction proceedings. They can act as the owner’s representative in court, or work with law enforcement when necessary to remove tenants that are unlawfully occupying property.

In the event of a legal action, your property management company can provide advice or qualified attorney referrals. Great property managers can help the landlord to stay in compliance with all legally binding and necessary activities to include proper documentation.

Financial Service Support

In addition to keeping track of you tenant’s rent collection and security deposit, your property management company can provide accounting services, make payments on your behalf and maintain detailed documentation and expense records. Your monthly income and expense reports will be delivered in the form of performance reports.

Count on your property manager to keep historical financial records for easy access when needed. When it comes to contractors, your property manager will provide tax documents like 1099 forms and other records to ensure ease of tax preparation. You may also find your property manager can give you reliable tax advice about which deductions can be taken.

Work Orders

When it is time for maintenance or a service request, your excellent property manager has a crew of fully-vetted contractors ready to work. They will work with your budgets and take responsibility for the project management just as an expert general contractor would. No rehab or remodeling project is too large or small for an expert property management firm.

As the seasons change in Chicago, the need will arise for landscaping in the spring and summer months, as well as leaf and snow removal in fall and winter, respectively. You can count on your expert property management company to cover you so your tenant stays happy and safe. A 24 hour maintenance phone number provided to your tenant will also work to foster trust and peace of mind.

Moving Out

As with the move-in walkthrough, your property manager will perform a detailed move-out walkthrough inspection of your tenant’s unit, noting damages and necessary repairs. Count on your expert property manager to ensure that your tenant’s security deposit is returned or rightfully applied toward necessary repairs. They will also make sure the keys are returned or the locks changed, and that the unit is deep-cleaned and ready for a new tenant. Marketing begins immediately after an availability date is established.

how property managers can help

These are just some of the services that a property management company can provide. If you need or want additional services, contact your property management company to see what they have to say.

Here at Lofty, we are excited about all the ways we can be of service. Talk to us today and see how we can help you live the life you deserve.

Wondering if a switch might be right for you? Give us a shout and learn more.

SCHEDULE A CHAT

or call

(844) 355-6389

work from home with a 100% commission real estate brokerage in Chicago

One Overlooked Issue for Chicago Home Workplaces

By | Agents, brokers, home buyer, home buying, Property Management, Property Managemnt, real estate, Real Estate Investment

For those who might be dubious about flexjobs.com’s contention that 75% of employees “are less distracted at home,” a survey from Atlassian, a developer of team productivity software, offers some common-sense confirmation: “Seventy-six percent prefer to avoid the office when they need to concentrate on an important task.”

work from home with a 100% commission real estate brokerage in Chicago

Naturally, the rising tide of Chicago home workers creates a corresponding surge in the need for Chicago home workplaces—areas fully or partially given over to business activity. We have already seen an increase in the interest that prospective buyers are expressing (and Realtor® Magazine predicts that home offices “will become a hot amenity for the long term”).

All this points to at least one wrinkle that hasn’t as yet been given much attention: workplace safety. The requirement for things like smoke detectors, adequate lighting and ventilation, and unobstructed walkways are second nature to human resource professionals—but few Chicago home workers have probably given them much thought. The immediate need for a strong Wi-Fi connection and comfortable seating are more likely to have drawn their attention. Yet, according to the government’s telework.gov website, ensuring workplace safety is the remote worker’s responsibility. Given the number of hours now being spent in Chicago home offices, that is worth treating seriously.

At Lofty Real Estate, it is our job to track the latest ins and outs of the everchanging Chicago home marketplace—and to share them with our clients that are buying, selling, and/or looking for property management for their real estate investment.

Wondering if a switch might be right for you? Give us a shout and learn more.

SCHEDULE A CHAT

or call

(844) 355-6389

When to List: Controversy in This One-Off Year

When to List: Controversy in This One-Off Year

By | Agents, brokers, home buyer, home buying, real estate

Sometimes, the timing for when to list your Chicago home is pretty much dictated by circumstances. Whether they be personal or professional changes that call for a move, when to list is (as politicians say) "baked in." When to list can't be rescheduled.

When that isn’t the case—when the timing is solely up to you—there are two ways to look at the decision. One of them is controversial.

Controversial: timing by season. Although many commentators do seem to come down on the side of listing for real estate’s busy season, there are reasonable arguments that counter it. Statistics do prove that the majority of transactions are initiated during good weather. During the spring and summer months, when the sun shines the longest, buyers tend to have more optimism (and possibly energy, although that’s debatable). There are definitely more prospective buyers during the peak real estate season—and they’re out in the neighborhoods house-hunting.

Yet from the seller’s point of view, it’s also true that there is more competition from other Chicago homes for sale. The peak season nay-sayers can also argue that prospective buyers who do their house-hunting in poor weather are demonstrably highly motivated—making for fewer looky-loos and more committed prospects.

Non-Controversial: listing when you’re ready. If 2020 has demonstrated anything, it is how ignoring the traditional real estate calendar can sometimes work out nicely. This year, the “peak” for national home sales has taken its sweet time getting here. It has been on its own schedule—one that nobody could have predicted a year ago. What hasn’t been debatable is what knowledgeable financial commentators have long recommended: when your house no longer fits your lifestyle and/or your financial circumstances indicate that a move will be advantageous—that’s the calendar you should pay attention to.

After the sale is completed, in retrospect, the right time to list your home will have been when your ultimate buyer was looking for a house like yours. That might be more likely when more shoppers are active—yet the persistent fact that many sales seem to be finalized toward the end of the year argues otherwise. The truth is, when you are ready to move on, emotionally, and financially, it’s always the right time to list your Chicago home. It’s also the right time to give one of Lofty’s real estate agent a call!

Thinking of listing your home? Give us a shout and learn more.

SCHEDULE A CHAT

or call

(844) 355-6389

Benefits & Drawbacks of Raising Rent

Buying Multi-Units Vs SFH as Investment Properties

By | Agents, home buying, Property Management, real estate, Real Estate Investment

Real estate in Chicago is a pro’s game. The dilemma of making a decision to buy a multi-unit or a single-family home is not strange to most property investors. Placing the merits and demerits side by side, and considering what works best for you and your investment goals is key to making the right decision.

Investing in Chicago real estate requires a solid discernment of the real estate scene. It’s easy to stare at a few numbers and just decide that single-family homes are better than multi-units and vice versa.

To completely figure out what represents a better real estate investment decision, let’s look at the two types of properties. Then we’ll do a compare and contrast and let you be the judge.

property managers chicago

Single-Family Units- Merits of Investing

A single-family home (SFH) is a property with only one family (unit). It’s a multi-unit when there is more than one family or tenants living in different units of the building.

There are many benefits of investing in Chicago real estate. and even more when you go with a single-family unit. Let’s look at these for size.

1. Ease of Selling Off

It’s easier to sell off a single-family home. This, in fact, means that you can quickly make a profit on the sale of a SFH than when your property is multi-units. There is also less stress in finding interested buyers when you’re trying to sell a single home.

 2. Faster Appreciation of Property

Single-family units appreciate quite faster than multi-units. Although the difference is often not so large, it’s not negligible either. The appreciation value is a reason you might want to consider when buying a single home because you’re likely to sell (if you decide to sell it) for a considerably higher price than you purchased it.

This also depends of course, on the duration between when you purchased and when you decide to sell it off.

3. Lesser Tenant Issues

With a single-family home, you’ll get fewer phone calls about maintenance and issues going on at the house. You may also not bother employing the services of a Chicago property manager. Since you have only one family on your property, you can self-manage on your own. Collecting rent monthly will also be easier.

4. Less Strenuous Maintenance

There is usually less wear and tear in single-family house units, (well, except the tenants are out to destroy you). In a single-family home, it’s easier to track damages and ensure the house in great condition.

Lofty Real Estate

Merits of Investing in a Multi-unit

Multi-units are also profitable, with some advantages over single-units. Let’s see the merits here.

1. Better Security with Covering Operation Costs

With a multi-unit, you have better chances of having all the fees covered by your tenants. The rent from multiple tenants will cover operational costs. With more people, and a better security management system in place, you are less likely to have theft or crime issues.

2. Regular Cash flow

With more than one tenant paying rent and bills every month, you have a regular cash flow. With excellent maintenance and tenant welfare, you stand a chance of never having a unit in your house empty for any long period of time.

3. Less Charges from Property Manager

Chicago property managers give discounts on every unit in a multi-unit property. At the end of the day, you’ll pay less fees to your property manager per unit than you would in a SFH (single family housing unit). That’s because the discounts you enjoy on multi-units are not extended to SFH.

4. Larger Pool of Tenants

When it’s time to put a new tenant in one of your units, Chicago brokerage companies can help you do a good and swift job of filling up your multi-unit. It’s easier for them to handle than SFH because more people are interested in renting a unit in a building rather than a single-family house.

Multi-unit Vs Single Family Home

To make an intelligent decision free of sentiments, let’s compare them under the following headings, using cold hard facts:

  • Investment risk
  • Expansion
  • Tenant Issues
  • Cash flow
  • Sale
  • Maintenance
  • Appreciation
  • Renters pool and Brokerage

Investment Risk

Single-family units are sometimes highly risky as a tenant can vacate any time. If this happens and you can’t find someone to replace them immediately, you’re going to bear all the costs of mortgage, taxes, and maintenance all by yourself.

There’s a certain comfort in knowing that with a multi-unit, you’ll always have someone living on your property and the rent will cover the costs of the mortgage, maintenance, utility, and so on.

Expansion

Expanding a single-family unit is easier. With a multi-unit, you’re more or less stuck with the original architecture forever. Except, of course, you’re ready to bear the cost of nearly tearing the building down and starting again.

Tenant Issues

Issues with tenants are more frequent in a multi-unit. Because there are more people living there, there’s a greater possibility of clashes and the need for conflict resolution.

Cash flow

Cash flow in multi-units is more frequent and dependable. If your property is well managed, you’ll hardly find yourself bearing the costs of maintenance by yourself. In single units, you may not have that level of security. It’s only one tenant paying and that’s it.

Sale

It’s easier to get a large pool of buyers for single-family homes than for multi-units. This means you can find more reasonable Chicago brokerage fees with SFH. Multi-units may not attract 100% brokerage since there’s more work in finding your buyers and keeping up with payment of rent.

Maintenance

For SFH, it’s usually higher. As for Multi-unit properties, due to the fact that more people live in your multi-unit property, maintenance costs may also rise. In fact, you’d have to employ the services of a Chicago property management company to help you keep up with this. A good choice would be Lofty property management company.

Appreciation

Appreciation rates in Chicago real estate have been different over the years. Of course, SFH appreciates slightly faster. But in any case, if your multi-unit is well maintained, it can appreciate just as well. Note however that if your SFH’s location is bad, you may run into serious debt.

The verdict: Single Family Home or Multi-unit?

This is not a clear-cut choice. In a busy location, you may want to trust multi-units more. There’s every chance that the units will always be occupied at every point in time.

Before buying a SFH, consider if you will be able to foot the bills of taxes, electricity, mortgage, and the rest in case there’s ever a long duration between when a tenant leaves and when another comes.

In Conclusion

There is no clear-cut winner. Depending on the location of the property, SFH may be a better option. The merits of multi-units are obvious as well, but if tenant issues and maintenance costs are not for you, you may just be better off with SFH. Either ways, there’s always one that’s more suitable in a particular situation.

Let’s Chat More About Investment Property!

SCHEDULE A CHAT

or call

(844) 355-6389

LinkedIn
LinkedIn
Share
Instagram