Real estate has for long been used as a secure form of investment by those looking to hedge their funds against uncertainty. The boom is also attributed to the fact that most banks are quick to finance individuals looking to own homes. This article takes an exploratory look at the condominium market. It expounds on the options that an investor has when it comes to making money out of Chicago condo rentals.
Buying a condo and opting to rent it out is an almost certain way to earn a steady supply of income. However, a number of variables will determine when you get to break even or if the investment is a white elephant. To establish the economic feasibility of your investment prospect, there are numerous calculations that you ought to make.
To begin with, some of the things to look at include insurance costs, maintenance expenses and taxes against the projected annual rental income. These costs are liabilities and are poised to eat into your profit, if any. Other expenses to bear in mind include legal assistance when carrying out evictions and advertising. It is important to note that in US law, both tenants and landlords have their rights.
If finances are not a problem and you simply intend to buy your property in cash, you should enjoy a smooth sailing during ownership. On the contrary, one who opts to buy using a mortgage is bound to encounter many challenges thereafter. For one, there is the interest charged on the mortgage to bear in mind. Nevertheless, most financial institutions offer standardized rates when calculating their interest.
An investor using a mortgage basically has to calculate how long it will take to repay it based on the projected income of the rental. If the income will be too little to service the loan within the shortest time possible, it may be a bad investment. Interest rates appreciate as one takes longer to service a mortgage.
You should only go for a mortgage if you can finance between 25 to 50 percent of it upfront. This way, you get to enjoy a lower repayment obligation and service it altogether in a shorter time frame. The most important thing to remember when investing using a loan is if your projected cash flow is positive, the investment is a good one.
Before you finance your investment, you might want to find out if there will be any hidden fees during your period of ownership. Unforeseen charges usually come from assessment and association fees. Assessment charges usually cover shared areas within the condo compound. This includes garage maintenance, building improvements in the exterior section, landscaping, parking lot, hallways and the main lobby.
The final major thing to look at is location. You want to purchase your property in an area that has good demand for rental space. Fortunately, most of the places in Chicago are good options. The area has a wide range of clientele, with many of them being college students and working class people. As long as you do your research patiently prior to purchasing, you should have nothing to worry about.
Buying a condo and opting to rent it out is an almost certain way to earn a steady supply of income. However, a number of variables will determine when you get to break even or if the investment is a white elephant. To establish the economic feasibility of your investment prospect, there are numerous calculations that you ought to make.
To begin with, some of the things to look at include insurance costs, maintenance expenses and taxes against the projected annual rental income. These costs are liabilities and are poised to eat into your profit, if any. Other expenses to bear in mind include legal assistance when carrying out evictions and advertising. It is important to note that in US law, both tenants and landlords have their rights.
If finances are not a problem and you simply intend to buy your property in cash, you should enjoy a smooth sailing during ownership. On the contrary, one who opts to buy using a mortgage is bound to encounter many challenges thereafter. For one, there is the interest charged on the mortgage to bear in mind. Nevertheless, most financial institutions offer standardized rates when calculating their interest.
An investor using a mortgage basically has to calculate how long it will take to repay it based on the projected income of the rental. If the income will be too little to service the loan within the shortest time possible, it may be a bad investment. Interest rates appreciate as one takes longer to service a mortgage.
You should only go for a mortgage if you can finance between 25 to 50 percent of it upfront. This way, you get to enjoy a lower repayment obligation and service it altogether in a shorter time frame. The most important thing to remember when investing using a loan is if your projected cash flow is positive, the investment is a good one.
Before you finance your investment, you might want to find out if there will be any hidden fees during your period of ownership. Unforeseen charges usually come from assessment and association fees. Assessment charges usually cover shared areas within the condo compound. This includes garage maintenance, building improvements in the exterior section, landscaping, parking lot, hallways and the main lobby.
The final major thing to look at is location. You want to purchase your property in an area that has good demand for rental space. Fortunately, most of the places in Chicago are good options. The area has a wide range of clientele, with many of them being college students and working class people. As long as you do your research patiently prior to purchasing, you should have nothing to worry about.
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Get a summary of important factors to consider before choosing a holiday accommodation option and more information about affordable Chicago condo rentals at http://www.residenceontheavenue.com now.
