I finally jumped on the bandwagon and entered the world of short-term rentals for a recent condo I purchased in Chicago.  The condo was cheap, not really in the greatest of areas, yet still near transportation.  The HOA existed but still recovering from the hard-hit Chicago housing glut that occurred since 2009, but the area in an up-turn as the whole nation recovers from that dreadful financial crises we all experienced.

Why Short-Term Rentals?

The answer was easy.  They make more money!

Here are some before/after photos:

 

 

As usual, the renovation took longer than I would have liked, but once I posted the pictures the reservation requests came in.  The next issue was finding the right price point.  Just like in any industry, you need to be adaptable to the market trends.  The first 2 months were booked solid, so I kept raising the rates, compared the value to the other short term rentals in the area, tweaked the cleaning fee and the extra costs involved with larger crowds and it took a while to balance that out.

Risks

These are the 2 words that scare off most investors: What if?  What if the lawmakers make short term rentals illegal in Chicago?  What if I get bad reviews from the rental?  What if I can’t find a local person to help manage the property with me? What if the neighbors complain? What if I don’t get any rentals?  What if the HOA changes their minds on furnished rentals?

Yes, there are risks which is why it’s so important with ANY real estate strategy you employ, you make sure there is more than one way to make money on the investment.  Sure, it’s possible the laws will change, absolutely the HOA could change their rules.  Maybe there are people moving out of Chicago.

At the very least, I have beautiful unit that any renter would want where I could command the upper end of the Section 8 guidelines.  IF market conditions change, I will enjoy a cap-rate higher than in most cities, and until the laws change or something else happens, I’ll be enjoying significant double digit cap rates on my Short Term Rental in Chicago. (CLICK HERE TO VIEW THE CONDO)

The Tools

I used a variety of internet venues, the most successful at this point is AirBNB.  I also listed it on VRBO (Homeaway’s distribution of short term rentals), plus Craigslist.  I didn’t buy the subscription for VRBO so that may be why I didn’t get as much interest with that tool.  I’ve also listed it for corporate month-to-month listings at HomeSuite, and advertised at the local colleges for student rentals.

The hardest issue I’ve had is the ability to synchronize all my calendars.  There are a few tools I have found, but they are pretty buggy at this point.

Next Steps?

If you’re interested in getting involved in this new phenomena of home sharing there are a couple of things you want to make sure about before you make the big investments:

• Is it someplace that people want to go to?
• Is there parking and/or suitable transportation for the guests?
• If there is an HOA or PUD, you need to consult with those rules.  Most won’t allow transient guests.
• Make sure the neighbors quality of life doesn’t suffer due to your investment.  You don’t want to be reported for any code violations or known for frequent police visits.
• Always use a tool like AirBNB as they offer you some protection.
• Make sure you have an alternate strategy due to fluctuating demands.

If you’re not already in my Facebook Real Estate Contacts Group, please CLICK HERE to join.  In addition, I have a new group specifically devoted to the issues around short term rentals.  You can CLICK HERE to join that group.

Any Questions?