real estate

Jun 23

Why Is Resident Rental Retention so Important in Chicago Real Estate?

By Anthony Zammitt | brokers, Property Management, real estate, Real Estate Investment

Keeping Tenants is the Ideal Chicago Property Management option to maximise rental income.

Turnovers mean vacancies, during which you’re not bringing in rents, yet still paying the mortgage. You might need to repaint, replace carpets, and professionally clean the unit thoroughly. There’s the marketing—advertising the vacant unit, showing it, holding open houses, collecting and processing rental applications, running tenant screening reports on all applicants, plus calling employers and prior landlords.

If you hire the help of a leasing agent or property manager, they will charge you a month’s rent/rental commission for their work too. The bottom line is that turnovers will devastate your Return on Investment (ROI). So how can you minimize your turnovers and keep your properties occupied at (nearly) all times?

The key is to retain your good renters for the long term. You want them so comfortable in your property that the idea of moving is a headache they would only consider under the most dire circumstances. The key to this starts from the beginning of their tenancy, by creating a great relationship with them. This can be created either through a great professional management company or individual landlords. Responsiveness, trust, and a nicely maintained property are the not-so-secret ingredients to this.

Finding great tenants is the first step; and our previous blog post outlines the best screening processes for this. Bad tenants can end up needing to be evicted in the worst case scenario, or at the very least, non-renewed. In other words, signing a lease with bad tenants is just setting yourself up for quick, expensive turnover. Also, try to keep out renters who move frequently from one home to the next. If you want to minimize turnovers, lease to renters who are stable and have a history of living in one home for more than 1 year, and avoid month-to-month leases.

Communication is the next most important factor in maintaining tenants’ happiness and comfort in your property. By responding to maintenance requests, general questions, and complaints in a timely, friendly and professional manner you will create a positive relationship with your tenants that is essential to building a sense of trust, security and loyalty on both sides. If you have particularly quiet tenants who tend to not submit these queries, then try proactively reaching out to inquire if everything is going well and if there is anything they need to improve their quality of life in the property.

Small gestures such as birthday wishes, expressing thanks for good tenancy, and happy holiday sentiments can make a lot of difference when it comes around to discussing re-signing.

As Chicago emerges from the global pandemic, financial concerns are on everybody’s minds after the past year’s uncertainty. The tip that is especially relevant at this time, is to not increase the rental price where possible, or even to reduce rent slightly to encourage current Chicago tenants to re-sign for another year.

No matter how well you’ve done with any of the above tips, good renters won’t stick around if their neighbors are loud, criminally active, or are just plain rude. This is especially important for Chicago owners of multi-unit buildings, or multiple rental properties in Chicago.

Every month, look at which renters’ leases are coming up for renewal soon. If you have to ask yourself whether tenants are worth keeping, you already have your answer: non-renew them and get better renters. Multiple late rental payments, complaints from neighbors, excessively requesting maintenance requests due to negligence are all some signs that you should find better tenants. Landlords can constantly look for excuses and justifications to keep bad renters in an effort to avoid turnovers. Do yourself a favor and do not retain bad tenants! Great tenants who will live in your property long term are the best investment you will ever make.

Pondering hiring a property manager? Give us a shout and learn more.

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Jun 16

How Property Management Can Make Move-In and Move-Out Easier for You

By Anthony Zammitt | brokers, Property Management, real estate, Real Estate Investment

The Perks of Property Management for tenant changeovers

When one lease ends and another begins, there’s a lot of work that needs to be done that can lead to a very busy and stressful time. Security deposits need to be sorted and returned to departing tenants, the first month’s rent needs to be collected from new renters, credit and background checks need to be confirmed, and in between, maintenance may need to be done on the property. Additionally, if you’ve got one tenant moving out without having one lined up to move in, that’s even more work—creating an ad and marketing the property, booking showings, and screening tenants. Altogether, it’s a lot of time that you could be using to do virtually anything else. Owning and managing investment properties shouldn’t be a mess of paperwork and endless busywork. If you’re tired of spending all of your time on what you thought would be a relatively passive way to earn extra income, you’ll be relieved to know that you’re not stuck—learn more about how property managers can make the move-in and move-out processes easier for Chicago landlords and property owners.

What to Do When Tenants Move Out

When tenants’ leases end and they move out, there are a few things that property owners or landlords have to do, including:

Ensuring the property is in good shape and performing any maintenance that needs to be done, such as repainting or changing locks.
Retrieving keys from the tenant.
Returning the tenant’s security deposit, if applicable.

These three tasks alone can be quite time consuming—finding vendors and contractors to take care of repairs, maintenance, and any updates you want to make can feel like you’re on a wild goose chase. Once you find contractors, you’ll have to fit them in your schedule during a time when you can be at the property. To say that it’s inconvenient is an understatement. Getting keys back from the tenant can also prove frustrating. If you’re working with a property manager, though, they can take the time to track down the tenant, so that you don’t have to deal with calling over and over again, getting their voicemail every time. Likewise, the best property management companies in Chicago will have a list of trusted, vetted vendors and contractors that they can schedule for any property maintenance you need, and you won’t have to be there for any of it if you don’t want to.

Managing Vacancy Periods in Chicago Rentals

After one tenant moves out, one of two things will happen: there will be a vacancy period, or the next tenant will move right in. For now, let’s focus on the former.

If your property is vacant, you need to place ads, market the property, field phone calls from interested renters, schedule bookings, and show your property. If you’re trying to do this on your own, you can end up spending almost all of your extra time dealing with the property—which can feel like more work than it’s worth. Property management companies in Chicago have written hundreds of apartment, condo, and home ads, and in addition to knowing the best places to market your property, they can often work out better deals with publications than individual landlords or property owners can, simply due to the higher volume of ads they place.

You want your vacancy period to be as short as possible so that you aren’t losing money, and property managers will be able to set your rental price according to current trends and market demands. You won’t have to worry if you’re charging too much or not enough for your rental, and people will be more interested in the property when it’s priced well.

Once the property managers have shown your property and have some potential tenants lined up, they’ll be able to screen them, too. You won’t have to deal with background checks or conducting interviews. Property management companies have tried-and-true methods for ensuring they’re getting reliable tenants into properties, too, so you won’t have to worry about whether the tenants are the type of people who pay rent late every month or host loud, late-night parties in their studio apartments every weekend.

Working with a property manager means you won’t have to treat owning investment property like a second full-time job.

Helping Tenants and Landlords with the Move-In Process

Now that you’ve got a tenant who is ready to move into your property (whether or not you had a vacancy period), you’ll have to do even more work. Some property owners and landlords like to be onsite when new tenants move in, for helping with anything that might come up, and if you own a lot of properties, that can mean busy days for you every time a new lease starts. You’ll also need to make sure that the new tenant has paid their first month of rent, which can, like getting the keys back at the end of a lease, sometimes be a frustrating process. New tenants may not know where to send rent at first, too, which can lead to a late payment or two. You shouldn’t have to worry about tracking down your payments, and when you work with a property management company in Chicago, you won’t have to. Property managers take care of everything related to the tenant move-in process. They can be onsite during the move, they can track down your rent checks, and if anything happens during the move-in process, they can quickly schedule maintenance or repairs. It’s a level of convenience that’ll have you wondering why you didn’t start up with a property management company sooner.

Enjoy Your Time and Your Property

Here at Lofty, we understand that your time is your most valuable commodity, and we work hard to ensure you won’t have to waste it doing busy work for your rentals. We can take care of everything during the move-in and move-out processes for your properties, and we can also manage vacancies so that you can earn more money. To start living the life you deserve to live, give us a call anytime—we’d love to work with you and help make your life easier.

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

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May 26

How to find the perfect tenants while Leasing in Chicago

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

The best screening process for Chicago tenants & how to avoid bad rental tenants.

At Lofty, we have experienced our fair share of “bad” tenants taken on from other Property Management companies or individual landlords. Unfortunately, there will always be fraudsters, scammers, and dishonest people attempting to get good housing by lying about their financial situation, tenancy history, credit score, or employment status etc. To avoid having to then pursue a costly and time-consuming eviction process of these bad tenants, the first step is to have a good and basically fool-proof screening system in place.

Every Chicago landlord should know that every successful Chicago apartment tenancy begins with a proper tenant screening and a tenant credit check. Due to recent changes in Cook County law, landlords and Property Managers have been revisiting their tenant screening procedures in 2020, when a new Cook County anti-discrimination law called the Just Housing Ordinance went into effect. That, on top of concerns in getting stuck with a tenant that then can’t be evicted due to Governor Pritzker’s continued eviction moratorium, has made property owners and managers extra cautious of being vigilant in their screening process.

Some basics to know before we dive into having the best screening process for Chicago Tenants.

If you are interested in Property Management services, the company you choose should handle all tenant screenings through a concise and streamlined process that they have perfected through experience so you don’t have to.
Tenant Applicants pay for the cost of screening and background checks. There is no cost to the landlord/owner as this is part of the application process.
Be warned, that while some applicants may look perfect on paper, this can indicate that it may be too good to be true. Use your good judgement, the advice of real estate professionals, and further research if in doubt. Remember, references are there to be contacted!

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Why Where You Advertise Your Application Matters:

There is no doubt that there are positives to every platform of advertising, and this post is not meant to discredit any of them. However, to find stellar tenants there are platforms that are less likely to receive positive results than others. The likes of Craigslist and Facebook marketplace, while not bad by any means, will undoubtedly receive drastically different results than the likes of via a professional real estate company’s website, word-of-mouth recommendations from trusted people, and those represented by an agent. This is because of the varying target audience and varying degrees of perceived professionalism. Someone applying for a rental via Craigslist may not feel the need to have a 650+ credit score, whereas other platforms will make this a requirement to even apply, nevermind to be considered.

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Do you Need to Know any Chicago/IL/National Tenant Screening Laws?

All landlords should be familiar with applicable tenancy laws. In April of 2019, the Cook County Board of Commissioners voted to pass the Just Housing Ordinance (JHO), with the ordinance scheduled to take effect on December 31, 2019. This requires all landlords in Cook County to assess a potential tenant’s qualifications before looking at his/her criminal history. It prohibits landlords from denying housing on the basis of arrests, juvenile records, sealed and expunged records. If a criminal background check shows that an applicant has a criminal conviction, the landlord must disclose the source of the information to the applicant so that he/she can dispute its accuracy. Landlords must also perform an individualized assessment of the tenant’s criminal history before denying housing.

In addition to concerns about criminal history, most landlords review a tenant’s credit history. Federal law mandates that all three major credit bureaus—TransUnion, Experian, and Equifax—require landlords to undergo a rigorous on-site inspection by a licensed third party inspector before receiving an applicant’s full credit check report. Inspectors check to make sure that reports are stored in a locked file cabinet, that there is a shredder onsite, and that the landlord’s home office is separate from the living area. Inspections can take several days to schedule and incur an additional cost to the landlord. Additionally, many part-time landlords may not pass such an inspection. However, if the applicant initiates the tenant screening process, an on-site inspection is not required, which is ideal for smaller landlords who screen tenants only a few times each year.

What Questions Should You Ask?

Landlords should ask for contact information of at least 2 previous landlords (not roommates, friends, or significant others) in the tenant’s rental application form, follow up with, and verify them as such. Aside from the obvious questions about eviction and damages in the tenant’s history, landlords should also inquire about complaints from neighbors, cleanliness of the apartment and any other potential red flags in their apartment rental history.

All Chicago apartment landlords should not accept any rental application, irrespective of the results of a credit report, until they’ve examined a bona fide form of photo identification clearly tying the prospective tenant to the name on the report. Careful landlords should check the birthdate on a credit report to the birthdate on a driver’s license to ensure that children who bear the same name as their parents do not attempt to finagle their way into a lease by substituting their parents’ pristine credit for their own. That has been known to happen from time to time, so landlords should themselves a favor when they’re being vigilant in their own “pre-screening” process. For landlords who do not have the time for these steps, it is strongly advised to not cut corners and to be aware that Property Managers are often hired for this exact purpose.

What Information will a Tenant Credit Check provide you with?

Valuable information such as, does the applicant have outstanding debt, past bankruptcy filings, or other financial obligations? Do they have large balances on credit cards? Do they have any liens taken out against them or their property? These answers could have major implications to a tenant’s ability to pay the rent in full and on time and are included in a full credit report.

Landlords should determine an acceptable range of credit to move forward with a tenant’s application. A healthy credit score should be consistent, similar in range from the three credit bureaus, and ideally are not thin files (less than five sources of credit). Landlords should apply the same credit history requirements to all tenants — remember that in Chicago and Cook County, landlords cannot discriminate based on a tenant’s source of income. Landlords should be familiar with fair housing laws and can read more about how they work here.

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What are the main problems of tenant screening services?

Many tenant screening services conducted by third-parties are beneficial for a number of reasons, namely that they’re efficient. Landlords looking for this may appreciate a quick, cost-effective screening process, however there are some drawbacks associated with this convenience. Namely, the reliability of the aggregated data. These third-party companies are pulling data from a number of public databases, and with a common surname there is an increased likelihood that landlords will see results for a completely different person in their tenant screening report. This is not the norm, but unfortunately it can be quite common.

Another problem with tenant screening reports comes in the form of customer service. Tenant screenings are generally viewed as speedy and quick transactions that follow the typical script of 1) landlord provides email address to screening company, 2) applicant receives email from the company and pays the screening fee, 3) credit report comes back to the landlord, and then the ball is in the landlord’s court. The decision to move forward with an applicant is squarely on them and they (hopefully) hold enough information to make an informed, unbiased decision. If the decision is to not move forward with a tenant’s application because of something on the credit report, then the landlord must inform the tenant that the credit check was the issue. The Federal Fair Credit Reporting Act requires landlords to provide an adverse action letter to tenants to inform them that something in the credit report was concerning and the name and contact information for that credit agency, too, so that the tenant can request a copy.

What Does My Ideal Tenant Look Like?

If you feel uncomfortable accepting credit scores lower than, for example 650, but you want to offer the option of a cosigner, then the same due diligence is required for checking the co-signer’s credit, employment history, criminal history etc. At Lofty, we take the approach that a good rent to income ratio is 30% or higher, a credit score of 650+, and continuous employment of 3 months or longer. Specific landlord requirements can deviate from this, and while tenant applicants do not need a 800+ credit score and earn x6 times the rental cost to be good tenants – if something seems suspicious about an applicant’s details don’t be afraid to ask for further information. Remember that there will be other applicants, and you should never accept just any application for fear of not finding more!

If you are interested in learning how hiring Lofty as your Property Management company can eliminate the stress from the tenant screening process, reach out to a member of our team today!

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(844) 355-6389

May 19

Is it time to Hire a Chicago Property Management Company?

By Anthony Zammitt | Agents, Property Management, real estate, Real Estate Investment

When is Property Management worth the Investment?

If you’re already a landlord managing your own rental property, you are probably already aware of the headaches that can be caused by property management. If you are an aspiring or soon-to-be landlord, be warned that property management can be an unpleasant experience at times.

While it is true that there are worst-case scenarios out there of tenants squatting, refusing to pay rent, destroying a property, sub-letting to strangers without owner approval etc., these are honestly rare and few and far between. That is not to say that this won’t happen to you or your property, but just that it is very statistically unlikely. The first way to improve your chances of preventing this type of behavior in a tenant is to have a great screening system in place. This is where a Property Management company can first come in useful. A professional Management company will have their screening process streamlined to be supportive of finding you the very best tenant in terms of income, credit score, landlord/employment references, and tenant history.

Inserting some distance between yourself and the tenant(s).

Property managers are built to tackle the dreary aspects of real estate leasing and administration. It’s basically like paying someone else to have your headaches. Among other things, property management firms have ready access to maintenance contractors, familiarity with local renters law, experience with the tenant application process, and financial reporting software. Additionally, property managers shield landlords from tenants, making it wonderfully easy to refuse a request for rent relief. The landlord simply says “no,” while the property manager is hired to be the bad guy.

What do property manger’s do?

The services performed by a property manager typically include:

Managing the tenant application process with a thorough screening process
Holding security deposit funds in escrows and ensuring compliance with local law
Renewing, ending leases, re-renting vacant properties, managing evictions.
Collecting and accounting for rent, including the assessment of late fees
Addressing routine maintenance problems
Periodically inspecting the property, including at the termination of the tenancy
Cleaning and re-keying property at the conclusion of the lease
Financial Bookkeeping, Providing Tax Reporting Documents
Liaising with tenants over disputes and issues
Overseeing Property Renovations

How much is a property manager?

The cost of hiring a property manager is typically a percentage of the monthly rent, plus various fees for incidental services. There may also be a vacancy fee (in case the apartment is not generating any income), a lease renewal fee or even an initiation fee. Typically, the base fee ranges from 8% to 12% of the monthly revenue (the cost is tax deductible.) At Lofty however, we charge a flat rate fee dependent on the number of units in a building so that owners are not limited by their rental value.

Landlords who live in a different city or even country to the property they rent to tenants, travel regularly, own multiple properties, or simply lack free time are all ideal candidates for property management assistance. If you’re a landlord, and you’re considering hiring a property manager, be sure to find out the following information while doing your research, to find out if they are the company for you:

What makes you different from other management companies?
Who will be assigned to manage my property? (It’s nice to meet/speak to the person you’ll soon be spending considerable time with)
How responsive will you be? Can you be reached 24/7/365?
What is your proposed fee structure? What functions are included within the fee and what functions entail additional expense?
What types of relationships do you have with vendors? Do you have preferred contractors? If so, in what areas? Do you have any financial arrangement or understanding with any such contractors that is not disclosed to your clients?
What software tools do you use and are they user friendly?
Are you and your employees properly licensed under Illinois law?

At the end of the day, hiring a Property Management company is a personal/business decision that is intended to make life easier for the property owner. When problems outweigh the positives of owning property, or you want to proactively prevent this from happening, Property Management will be worth the investment. If you need help managing your property, there are plenty of high quality companies out there, like Lofty, to help you manage your investment to ensure you get the best returns out of it!

What to learn more about property management? Give us a shout and learn more.

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May 12

Time to Invest in Chicagoland Real Estate

By Anthony Zammitt | Agents, home buyer, home buying, real estate

Is Now the Time to Buy Property in Chicago?

First-time buyers, recurring real-estate investors, or acquisitions companies; no matter who you are, investing in real-estate is once again becoming more popular following on from the infamous 2007 Global Financial Crisis. With digital platform growth, there is an increasing accessibility to education on the topic creating an invigorated awareness to increase financial gains. Investing can be a great way to prepare financially for the future, and to help shelter against future economic recessions or declines.

Last year saw a complete shutdown of Chicago’s hospitality, entertainment and tourist industries. Many streams of property owner’s income like Airbnb or Vrbo dried up, leaving many landlords grappling for financial stability. With states and countries alike now starting to re-open and allow travel, this may be the chance to get a head start on what is sure to be a boom in the tourist industry. Property owners can get in on this by making their properties available for short term stays in between long-term leases, or even solely focus on this particular market of renting.

With the Chicago society and economy set to fully open in July, and the rest of the United States and beyond following suit/preceding this move, an increase in the need for short-term, long-term and seasonal housing is imminent. This demand is reflected in the steadily increasing prices in the market compared to the same time last year, indicating that now is a great time to invest in Chicago real estate before prices climb back to their pre-pandemic rates – or even surpass them!

With real estate representing a dangerous and burdensome investment during the 2020 pandemic, this sense of trepidation is finally receding. Whether you are looking to invest in a personal home, downsize, upsize, purchase a single family or multi-unit building to rent for additional income, or begin a commercial business investment, 2021 is set to be a great year for making these types of purchases in Chicago!

Get started & learn how Lofty Real Estate can help you invest in Real Estate? Let’s Chat!

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May 05

Chicago Renting Trends Post-Covid

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

After-effects of the Pandemic on Chicago’s Rental Real Estate Industry

It should be a surprise to nobody that this pandemic has caused a ginormous shift in almost every industry known to the modern business world. While the world stood still early last year, many industries took a detrimental hit financially. Real estate was not spared, and now, as things slowly but surely begin to gleam a light of hope to the return of normalcy, rental trends are once again pointing upwards.

As more and more people get the vaccine and leave remote working behind, the return to the office is beginning to reinvigorate big cities like Chicago. Bars, restaurants, beauty salons and gyms are all open, albeit with mask-mandates, capacity limitations and increased cleaning processes. Commercial space that has laid vacant for months is starting to become occupied once again.

Leases are being snapped up quickly as downtown apartment units are once again becoming more expensive to rent thanks to the ending of a stretch during the pandemic when tenants enjoyed flat or falling rental prices and widespread landlord concessions such as first month free, no move-in fees or included utilities.

Higher rents could contribute to an anticipated rise in inflation, accrued by multiple federal stimulus checks, low borrowing interest rates and pent-up demand after months when the pandemic damped consumer spending. Rent typically accounts for about one-third of the consumer-price index, which economists expect to increase in the months ahead. Renters can therefore expect to see a noticeable rise in their outcome, and are being encouraged to plan accordingly.

Looking for a Property Management Team that can help navigate you through post-Covid? Give us a shout and learn more.

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Apr 28

Chicago Affordable Housing 101: Tenants & Landlords

By Anthony Zammitt | Agents, brokers, Property Management, Property Managemnt, real estate, Real Estate Investment, tenants

A basic guide to Chicago Affordable Housing Options for both renters and owners

The Chicago Housing Authority is the third largest public housing agency in the nation. CHA serves more than 20,000 low-income households, by providing safe, decent and affordable housing in healthy, vibrant communities. Public housing provides homes for families, the elderly and those with disabilities from scattered single family houses to apartments for elderly families.

There has long been a stigma against those on the Affordable Housing scheme. Now, with a significant portion of Chicago’s population still financially reeling from the pandemic, the market for affordable housing has increased dramatically in the past year.

For tenants seeking information on how to apply for this affordable housing, they are advised that CHA’s Housing Choice Voucher Program (previously called Section 8) allows low-income families to rent quality housing in the private market via federal funds.

Through this Program, CHA pays a portion of eligible families’ rent each month directly to the property owner. Families can use their vouchers to rent a house or apartment in the private market throughout the city of Chicago. Because there are more families who need rental assistance than there are funds available, CHA uses a waiting list to administer the program to eligible families. Names are selected for the waiting list randomly using a lottery process. Participants in the HCV program pay approximately 30% of their income for rent and utilities. Applicants are advised to check the eligibility requirements to qualify for the HCV Program before applying.

For landlords interested in having their private property being leased to Affordable Housing applicants, the following steps summarize the process to become an HCV property owner:

Attend Owner Briefing (Recommended)
Market your property
Complete and submit a Request for Tenancy Approval (RTA)
Pass Housing Quality Standards CHA owner eligibility screening (HQS) Inspection
Accept CHA rent offer
Execute lease and Housing Assistance Payment (HAP) contract
Comply with HUD and CHA’s rules and regulations

Every Regional provides a resource center that includes a wide range of information, internet access, property listings. Each resource center is open Monday through Friday from 8:00 a.m. – 5:00 p.m. No appointment is necessary.

For more information see the Property Owner Guidebook.

While this route is not for every landlord/property owner, it may be an option for some who have never thought to consider it before. As with non-HCVP tenants, there are pros and cons to this decision that may not be for everyone. This is simply an informative guide meant to explore the many options available to Chicago property owners.

Some advantages/incentives include:

In order to provide an incentive for property owners to rent units to CHA voucher holders in “Mobility Areas,” the Chicago Housing Authority is implementing a program that provides new HCV property owners an additional lump sum payment equal to the monthly contract rent if they lease a unit to a voucher holder in these designated areas. Effective March 1, 2018, a Mobility Area is defined as a Chicago community area with 20% or fewer of its families with income below the poverty level and a below median reported violent crime count (normalized by the community area’s total population). Some community areas with improving poverty and violent crime rates along with significant job clusters are also designated as Mobility Areas.

Under state law, Illinois property owners who rent to participants in the Housing Choice Voucher (HCV) Program may receive property tax abatement (“tax savings”) in an amount up to 19% of a property’s Equalized Assessed Value (EAV). The actual amount will depend upon tax rates, the state equalizer, EAV and the number of qualified units rented to HCV Program participants. This however, is dependent on meeting certain criteria.

CHA portion of rent is guaranteed on-time income so long as inspections are passed and the property is kept in good condition for the tenant(s).

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Some consequences/disadvantages include:

The CHA requires regular inspections of the property to maintain its habitable condition for the tenants. This involves planning, paperwork and if an inspection fails, owners will not receive rental income until the failing items have been corrected.

As this program is for low-income residents, there may be maintenance issues that a financially independent tenant would deal with but a HCVP tenant can not afford. Some of those items are the ones that often crop up in the county inspections. Others are lease obligations a HCVP tenant can’t cover

Learn More About Chicago Affordable Housing. Give us a shout today.

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Mar 26

Chicago Real Estate is on Uniquely Solid Ground

By Anthony Zammitt | Agents, brokers, Property Management, real estate

Chicago Real Estate Boom: Simply Unlike the Last One

Last week, the Wall Street Journal addressed a topic that’s been on the back burner for some time: the likelihood (or not) that the steady rise in housing prices might be a precursor of a future bust like the one that racked this century’s first decade. Real estate reporter Nicole Friedman’s piece presented a persuasive case for differentiating the two sets of circumstances—a welcome backdrop for this season’s home sellers and buyers (and for Chicago real estate in general).

“It’s Different from the Last One” was the top-line verdict regarding what the Journal called “the current housing boom”—a characterization based on the nation’s home sales, which “are hitting peaks last seen in 2006.” Some of the statistically verified reasons:

Mortgage-lending standards are stricter.
Down payments are higher.
Tight inventories are nearly certain to continue to support prices.
Economists say there are more barriers to entry—making buyers less prone to default.
Demographics indicate a number of long-term trends “that will keep the housing market hot,” enabling even debt-ridden homeowners to sell at a profit rather than slide into foreclosure.
New buyers are being attracted by historically low-interest rates rather than easy access to credit.

With new-home construction continuing to lag demand—and as millennials age into their prime homebuying years—the demographic picture is substantially different from that which preceded the 2007 collapse. If this is anything like a bubble, it’s more like a cast-iron one!

With winter behind us, the Chicago real estate market is entering its busy spring season—one that you might want to join. No matter if you are looking to buy, sell, or looking for a property manager, give us a shout. We will be standing by to help you explore the possibilities!

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Jan 06

When to Appeal Your Property Tax Assessment

Chicago Real Estate and Five Major Trends for 2021

By Anthony Zammitt | 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.

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:

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.
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—
The continuation of ‘nice and low’ mortgage interest rates, which markedly moderates the effect of the first two trends.
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!”
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!

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Dec 23

Looking Back: How did 2020 Fare for Real Estate?

By Anthony Zammitt | 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.

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!

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Dec 16

Motley Fool Recommends a “Drawback” for Chicago Investors

By Anthony Zammitt | 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.

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!

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Dec 02

How Seasonal Shopping Events Support Chicago Homeowners

By Anthony Zammitt | 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.

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!

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Nov 25

3 Things Investors Must Analyze When Buying A Chicago Rental Property

By Anthony Zammitt | 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.

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.

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.

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.

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Nov 18

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What Does An Amazing Property Management Company Do?

By Anthony Zammitt | 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.

Agents, Brokers, Property Managemnt, Real Estate Investment

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.

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.

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Nov 11

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One Overlooked Issue for Chicago Home Workplaces

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

At Stanford, they call it the new “working-from-home economy”—one featuring “an incredible 42% of the labor force working from home full-time.” The latest Gallup survey finds 58% working at home at least some of the time. Chicago workers who count themselves among the 51% who prefer remote work “because it improves work-life balance” will also be in sync with their employers. According to Digital Workplace’s estimate, firms that offer remote work report having a “25% lower employee turnover rate.”

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.”

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.

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Nov 04

When to List: Controversy in This One-Off Year

By Anthony Zammitt | 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!

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Oct 28

Buying Multi-Units Vs SFH as Investment Properties

By Anthony Zammitt | 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.

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.

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.

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Oct 21

Why Buying and Owning Rentals is Always a Good Investment

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

Owning a rental is always good; you get paid for being the landlord. It's a really profitable slice of the Chicago real estate investment market. This is mainly because of two things; the first being the steady stream of passive income it provides, and the second being the opportunity to get tax write-offs.

Of course, owning a real estate rental in Chicago is not an easy feat. The rewards are potentially huge only if you have a keen eye for details, proper preparation, and a sound Chicago property management company in charge of your property.

Managing rentals on the Chicago real estate scene can be done all by yourself, but like most people you may get overwhelmed over time. At this point, you can use the services of a Chicago property manager, such Lofty Real Estate Chicago.

Investing in rental properties is always a good idea, once you know the things you need to know, which we will be discussing.

Buying Rentals: Need to Know

Of course, when buying rentals in Chicago, you can either do it yourself or you can use a Chicago brokerage company. Asides from this, it is usually a sound policy to calculate your expected cash flow on the rental property before you purchase it. Think of it as a business; no one goes into a business to make a loss.

For you as a rental owner, the cash flow your property generates is your profit, so to say. Because of this, your cash flow should be at least at break-even point, when you factor in your expenses on the property.

Buying a property with an expected cash flow level that is below the amount you’d spend on expenses such as monthly mortgage payments, depreciation, etc, is not a good idea, and we do not advise it.

What are the Advantages of Owning a Rental Property?

There are a lot of advantages of buying and owning a rental property over other forms of investment (we won’t compare, don’t worry), and they are;

1. Diversification of Investment Portfolio

Investment, no matter the amount of probable gains, always involves a risk. Because of the inherent risk in the world of Investment, it is unwise to put all your money into one investment portfolio, especially stocks. An unforeseen switch in the market dynamics and all your money might be gone with the wind. Owning a rental real estate property helps you mitigate greatly against the inherent risk involved with the investment. Once you have done your due diligence, your rental property will always be a source of income for you – one you can rely on to a very great degree.

2. Getting Tax Write-offs

The tax system favors owning rental properties a lot, and that’s another perk of buying and owning a rental property. Owning a rental property means you don’t get to pay tax on your rental income. Owning a rental property means there will be depreciation and other property related expenses. It is a usual practice to deduct the depreciation and other expenses from the federal income tax, and so this leaves the rental income completely free of any deductions.

3. Steady Stream of Passive Income

Owning a rental property is one of the safest ways to earn a steady stream of passive income every month. It’s your job (or your property management’s job) to ensure you keep renters who pay their rent promptly.

The “steady” in the income hinges on a lot of factors including doing a background check for prospective renters, so you can easily weed out those with a history of causing trouble for their landlords.

The best part is that you do not have to get involved in the background checks exercise or even get involved in the day to day running of the property before you get your passive income. You can simply leave your property to a Chicago property management company and focus on other areas of your life, whilst they manage the property and ensure your passive income keeps rolling in.

4. The Chance to Sell at a Premium

The usual industry practice is that you should try to hold your rental property for at least 10 years, but that rule doesn’t always work for every situation.

Owning a rental property in an area that increases the value of your property means you can sell off the property and make a gain on it at any time.

Even if the market dynamics change and the prices of property plummet, you can still rent out your property and make a rental income that will cover the costs of owning the property. You can do this till you’re ready to sell, and you would not lose any money.

Also, real estate market values generally appreciate over time, and the real estate market is usually one of the first to bounce back in case of a recession. So, the chances of losing money on your rental property investment over time are very low.

5. Growing Your Equity

Growing your equity is a goal for everyone, and owning a rental is a good way to do this. It is always good practice to purchase a rental property with a mortgage. Once this is done, you’ll have to start paying up on the mortgage payments, and you can use the rental income to pay for your mortgage.

This would be especially easy if you’ve accurately calculated the amount of cash flow to expect from owning the property. It would basically be as though your tenants are paying your mortgage for you, and over time, your debt will shrink and disappear, and your equity will start to rise steadily.

Conclusion

Buying and owning a rental property is one of the best ways to not just earn stable, passive income, but to also grow equity. By understanding and calculating just how much you can expect with regards to cash flow from the property, you can forecast how long it will take you to pay off your mortgage and start growing your equity.

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Oct 14

100% Commission Brokerage in Chicago work from anywhere

Leveraging Property to Buy Property: A Full Guide

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

No other industry has made more millionaires than real estate. So, your drive to acquire a property is very well placed. Getting a second property is very possible, even if you do not have the cash for it. The key thing is leverage, and that is why we have written this guide, so we can show you how to use leverage on your property to buy another property.

Is Leveraging a Good Idea?

The unofficial cardinal rule of investing in real estate is that you invest, or buy real estate with someone else’s money, not yours. This is the basis of leverage in the Chicago real estate investment market; by using someone else’s money to invest in real estate, you are making gains from your lender’s money.

Leverage is a well-known strategy in the Chicago real estate market, and it is the most widely used way to acquire real estate. There is a drawback though; when real estate values rise, it is to your advantage. But when they fall, you are at a disadvantage. This is why it is crucial to do your due diligence about a property when you want to use leverage to acquire it.

Leveraging Your Way to the Second Mortgage

Simply put, a second mortgage is a mortgage taken out when you still have a mortgage in effect on your first property. Doing this is only possible if you have enough equity on your first mortgaged property since a second mortgage is a riskier endeavor than the first.

The usual practice is that your first property is used as collateral for the second mortgage, and most lenders will only agree to a deal if you have enough equity on your first property. This is the big risk with leveraging property to buy the property.

The second mortgage can be used for anything, including using them to service personal expenses.

Types of Second Mortgages

There are basically two types of second mortgages available for use in the Chicago real estate market. They are;

Home Equity Loans
Home Equity Line of Credit (also called HELOC)

1. Home Equity Loans

Home equity loans are a type of second mortgage in which you can borrow a certain amount of money in a lump sum, payable over a period not exceeding 15 years at a fixed rate of interest.

Basically, you are using the amount of your home you own (i.e. the amount of mortgage you’ve already paid back on your home) to back up your credit. If you fail to pay, your house is liable to be foreclosed by the lender.

Home equity loans are best for investors looking to leverage their property to buy a rental property, as rental properties usually require a significant amount of down payment.

2. Home Equity Line of Credit

Popularly called HELOC, this type of second mortgage is different from regular home equity loans in that they are payable with adjustable rates.

HELOCs are the credit cards of second mortgages, and they work in a similar manner; there is a credit pool you can repeatedly draw from, it has a set limit and some lenders even give you an actual credit card. HELOCs have draw periods in which you can draw from the credit pool as you need the money, without having to pay back. This draw period is between 5 to 10 years.

HELOCs also have repayment periods, wherein you pay back all the money you have borrowed at adjustable rates, as mentioned earlier.

Investment Real Estate Deductions You’re Eligible

How Do You Leverage One Property to Buy Another?

There are two ways to do this, put simply. They are;

1. Leverage Rental Property to Buy Another

A rental property is a good investment if bought properly. Managing it yourself might not be easy, which is why we advise that you use a Chicago Property Manager, or a Chicago property management company, such as Lofty Real Estate.

Using your rental property as leverage to get another property is the easier of the two ways of leveraging property to buy another property. This is because the rental income paid by tenants can be used to pay up the mortgage on the rental property and gain some equity.

Using a rental property as leverage for buying another property would involve using the rental property as collateral, as mentioned earlier. A second mortgage would also involve higher interest loans than the first, so you have to be absolutely sure your primary property has enough equity to cover the expenses associated with taking a second mortgage.

2. Leverage Your Primary Residence to Buy Another

Another way of leveraging property to buy property can be this scenario; using the equity on your primary residence to get another mortgage. It can be another house or even a rental property. Doing this will mean your primary residence will be at the mercy of the lender if you default on the second mortgage payments.

Requirements for Leveraging Property to Buy Property

Building up a good level of home equity and a great credit score are central to the success of your chances when taking out a second mortgage.

How to Get A Second Mortgage

1. Know How Much Equity You Have

Knowing how much equity you have will help you make a quick decision on whether or not to go for a second mortgage and leverage your property to buy property. The more equity you have, the more your chances of success when it comes to your application for a second mortgage.

2. Check Your Credit Score

This is also another key part of the process. An excellent credit score will also improve your chances of being approved. If you’re interested in leveraging your primary property to buy another property, then you have to possess a credit score to match.

3. Pick out Your Preferred Second Mortgage Option

There are two options for you here, either you go for a HELOC or a home equity loan. Each option has its own peculiarities and benefits, so be sure to pick one that suits you. If you’re leveraging property to buy another house, going for a HELOC might be best. On the other hand, if you’re leveraging property to buy a rental property, then going for a home equity loan where you’ll get a lump sum might prove to be the better option.

4. Look Around

Once you’ve carried out these three steps, then it’s time for you to find out the options you have with regard to lenders and their rates. Check out the terms of each second mortgage very well, and ensure you don’t sign until you’re convinced it’s the best deal for you.

In Conclusion

Leveraging property to buy property is a smart way of acquiring more property, especially if you have the required equity. With our guide, you have all you need to know about leveraging property to buy property.

Looking to purchase investment property? Give us a shout and let’s learn how we can reach your goals.

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Jul 31

Chicago’s Real Estate Market in 2020

By Anthony Zammitt | Agents, Agents, Brokers, Property Management, Real Estate Investment, brokers, home buyer, home buying, real estate

If you’re planning to sell a home in the area, you might need to pack your patience. Recent data shows that Chicago is one of the “slowest” housing markets among the major metros when based on median “days on market.”

Despite losing residents at a high rate, Chicago is still America’s third largest city and the economic driver of the Midwest. Although there is not a negative impact of buying a house in 2019 versus 2020, it is strongly advised by experts to purchase a house next year. In 2020, the largest group of Millennials will turn 30, which will be good news for an industry that may need it.

The National Association of Realtors’ annual home-buyer profile has recorded an average home-buying age of 30 that has stood for decades.

While young people have flocked Downtown, bringing with them corporations seeking skilled workers, Millennials will likely turn back to the suburbs when it comes time to buy. But because so many jobs have moved from the suburbs to Downtown, Millennials will likely look for housing in inner-collar suburbs that have urban amenities like public transportation and walkability.

The year 2020: where inflation and financing qualification could hurt prospective buyers. According to Zillow, rising mortgage rates are encouraging homeowners to stay put and discouraging would-be buyers.

Higher interest rates should eventually slow the intense pace of home value appreciation that we have seen over the past few years, a welcome relief for hopeful buyers. Overall, home prices aren’t expected to grow much, and market crashes are highly unlikely. That should make it a safer purchase for buyers and more difficult for sellers to get the best price possible.

May 31

Top 8 Ways to Make a Great First Impression

By Anthony Zammitt | Agents, brokers, first impression, real estate

You've probably heard time and time again the importance of first impressions in career development. In real estate, first impressions are so vital that they can make or break your career and reputation. The customer experience you provide is the one thing in this industry that you have complete control over. Technology will never compare to the human interaction and the value you can bring to the home buying/selling experience.

Prepare

If you have the opportunity to have a call before meeting a client, ask a few quick questions that can give you insights into who they are and what they are looking for. Their answers will help you better prepare for the first in-person meeting. Before your first meeting with potential clients, conduct some brief research on the person you’ll be meeting. With LinkedIn, Facebook, and Instagram you can determine their career and personal interests with a few clicks. Also, it’s not uncommon, that you will find mutual friends which are great for a conversation starter. If they’ve already reached out to you with some information, make sure that you go back and re-read so that you’re prepared and not asking questions that they’ve already given you the answers to. If you’ve had a previous phone call with them, refer to your notes and show that you are an active listener. Try to prepare at least three talking points that you think are important to your client. Top real estate agents never come to meetings empty-handed. Print out ideas, suggestions, information about sites and pricing. This shows you are the expert in the industry and are taking the lead. Without preparation, you can come off as unorganized and unprofessional.

Appearance is also extremely important for first impressions. Dress professional, clean, and polished. Don’t overdo your look with flashy jewelry or accessories that can be distracting. Avoid the fancy attire, and stay true to you. It’s also important to dress for the market. Don’t wear a black suit and tie or a gown to show a beach house.

If clients are coming to your office, create a clean and organized environment that also has character. Local artwork is a great way to get away from the sterile office stigma.

The in-person meeting

It’s game time! You’ve done your prep work and you’re now ready to meet with your client for the first time! Be positive, confident and remember that you are the expert. Always arrive at the location early, because showing up late is a great way to ruin any first impression. Introduce yourself and thank them for taking the time out of their day to meet with you.

Body language

Some may argue that body language can have more power than words. Try to walk with your chest high and practice sitting up straight without crossing your arms. Be completely open towards them and refrain from closing yourself off.

Build rapport/common ground

Finding common ground is a great way to start off on a positive note. Common ground is something that you both can relate to and can connect on. It could be anything from sports teams, to attending the same college, to kids. This is where your social media research will come in handy! The more information you have on someone, the easier it is to make that initial connection.

Ask the right questions

By now, you should already know what questions you want to ask your client to ensure that you walk away from the consultation with all the information you need to immediately get started helping them and so that they feel as if you’ve proactively done your part to help them.

Active listening

If you’re asking the right questions that don’t always end with a yes or no answer, you should be getting your clients to speak with depth on what they need/want. The power of active listening has a positive impact on people. Really listening to what they’re saying and engaging lets them know that you understand them and want to know more. People love talking about themselves and your thought-provoking questions will help you find out more about them on a deeper, mutually beneficial level. Try not to look at your phone or computer unless you are showing them something.

Show how you stand out from the rest

Now that you’ve built rapport and connected with your clients, it’s time to show them your abilities as an agent and the unique experience you bring to the table. Introduce why you’re passionate about real estate and share your background. Highlight your credentials and go into some detail on the markets you’re familiar with and the technology you use to make the buying/selling process easier for them. Clients will pay more for an agent that offers an experience that makes their life easier.

Follow Up

You should follow up with them almost immediately with a thank you note and outline of next steps. If possible, put in any extra work you can to show that you go above and beyond for your clients. For example, stop by the neighborhood they’re interested in, take pictures and send to them. Anything you can do that shows how you take customer service to the next level is always appreciated.

Great first impressions are a sure way to win more clients and keep them happy. Don’t forget that over 60% of business each year comes from the people you know, past clients, and referrals. One great first impression can lead to countless future clients.

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

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Keeping Tenants is the Ideal Chicago Property Management option to maximise rental income.

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The Perks of Property Management for tenant changeovers

What to Do When Tenants Move Out

Managing Vacancy Periods in Chicago Rentals

Helping Tenants and Landlords with the Move-In Process

Enjoy Your Time and Your Property

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

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The best screening process for Chicago tenants & how to avoid bad rental tenants.

Why Where You Advertise Your Application Matters:

Do you Need to Know any Chicago/IL/National Tenant Screening Laws?

What Questions Should You Ask?

What Information will a Tenant Credit Check provide you with?

What are the main problems of tenant screening services?

What Does My Ideal Tenant Look Like?

If you are interested in learning how hiring Lofty as your Property Management company can eliminate the stress from the tenant screening process, reach out to a member of our team today!

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When is Property Management worth the Investment?

Inserting some distance between yourself and the tenant(s).

What do property manger’s do?

How much is a property manager?

What to learn more about property management? Give us a shout and learn more.

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Is Now the Time to Buy Property in Chicago?

Get started & learn how Lofty Real Estate can help you invest in Real Estate? Let’s Chat!

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After-effects of the Pandemic on Chicago’s Rental Real Estate Industry

Looking for a Property Management Team that can help navigate you through post-Covid? Give us a shout and learn more.

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A basic guide to Chicago Affordable Housing Options for both renters and owners

Some advantages/incentives include:

Some consequences/disadvantages include:

Learn More About Chicago Affordable Housing. Give us a shout today.

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Chicago Real Estate Boom: Simply Unlike the Last One

With winter behind us, the Chicago real estate market is entering its busy spring season—one that you might want to join. No matter if you are looking to buy, sell, or looking for a property manager, give us a shout. We will be standing by to help you explore the possibilities!

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Finance Guru’s Five Real Estate Trends for 2021

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

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New Year’s Retrospective Cheers Chicago Real Estate Watchers

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Investors Benefit from this “Drawback”

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

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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.

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

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Crunch the Numbers

Rent-to-Value Ratio

Cash Flow

Location, Location, Location

Already Popular Or Still Rising

Education Is So Important

Neighborhood Watch

The Property

What Type of Property is It?

Skip the Fixer Upper

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

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Market Value

Creative Marketing

Tenant Selection

Leasing

Moving In

Lease Payment Collection

Provide Legal Support

Financial Service Support

Work Orders

Moving Out

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

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

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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.

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