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.
Owning a condo and leasing it out sounds like a prudent way to make money. However, the truth is that not every investment pays off, as some often prove to be white elephants. To avoid disappointment, it is important to carry out due diligence by analyzing the financial bit of it prior to buying property.
For starters, you must consider the annual rent that your unit will bring versus taxes, insurance and maintenance costs. Many of these costs are what you should deduct from your annual revenue so as to gauge your real revenue. Other costs that you might want to factor in include the cost of advertising and legal aid for evictions. Remember tenants have their own rights.
If you are buying your property straight up in cash, the only thing you will have to worry about are the aforementioned costs. However, it is an all different ball game for those financing their ownership through mortgages. For instance, there is interest to think about. The margins that most banks give are pretty much the same across the board.
The most heartbreaking thing about using a loan to buy your unit is the fact that you will have to service it using your rental revenue for a substantial period of time. If your projected revenue appears significantly low to use in repaying your loan on time, you should consider opting for an entirely different kind of investment. Remember the longer your repayment window lasts, the more expensive your mortgage gets.
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.
Location is the final aspect to bear in mind. Simply put, choice of location should be guided by demand. There are lots of potential clients in Chicago. Many companies and colleges are located in the area, contributing to an increased demand for rental units. Research is the sole thing to focus on before purchasing.
Owning a condo and leasing it out sounds like a prudent way to make money. However, the truth is that not every investment pays off, as some often prove to be white elephants. To avoid disappointment, it is important to carry out due diligence by analyzing the financial bit of it prior to buying property.
For starters, you must consider the annual rent that your unit will bring versus taxes, insurance and maintenance costs. Many of these costs are what you should deduct from your annual revenue so as to gauge your real revenue. Other costs that you might want to factor in include the cost of advertising and legal aid for evictions. Remember tenants have their own rights.
If you are buying your property straight up in cash, the only thing you will have to worry about are the aforementioned costs. However, it is an all different ball game for those financing their ownership through mortgages. For instance, there is interest to think about. The margins that most banks give are pretty much the same across the board.
The most heartbreaking thing about using a loan to buy your unit is the fact that you will have to service it using your rental revenue for a substantial period of time. If your projected revenue appears significantly low to use in repaying your loan on time, you should consider opting for an entirely different kind of investment. Remember the longer your repayment window lasts, the more expensive your mortgage gets.
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.
Location is the final aspect to bear in mind. Simply put, choice of location should be guided by demand. There are lots of potential clients in Chicago. Many companies and colleges are located in the area, contributing to an increased demand for rental units. Research is the sole thing to focus on before purchasing.
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Get a summary of important factors to consider before choosing a holiday accommodation option and more information about affordable Chicago condo rentals at http://www.residenceontheavenue.com now.
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