For long, many people have relied on real estate to hedge their liquid assets against the unforgiving uncertainties of the global economy. The boom in real estate is also as a result of the willingness of financial institutions to finance aspiring homeowners. This article explores the various dynamics surrounding the investment prospects of condominiums. It offers valuable advice to investors looking to exploit the Chicago condo rentals market.
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.
The most basic aspects you must analyze include maintenance expenditure, taxes and insurance fees against the annual rental revenue you expect to get. Such costs should be regarded as unavoidable liabilities as they water down profit. Other expenses you should include in your financial projections include advertising fees and the cost of procuring legal assistance during evictions. A tenant has just as much protection as a landlord under US law.
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 proceeding to finance your ownership, it is important to ascertain if you will have to spend extra for certain services as an owner. Association and assessment charges are the two most common charges in condo ownership. Assessment fees basically cater for services in common areas within the property. Examples include landscaping and works on the hallways, lobby, exterior, garage and parking lot.
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.
The most basic aspects you must analyze include maintenance expenditure, taxes and insurance fees against the annual rental revenue you expect to get. Such costs should be regarded as unavoidable liabilities as they water down profit. Other expenses you should include in your financial projections include advertising fees and the cost of procuring legal assistance during evictions. A tenant has just as much protection as a landlord under US law.
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 proceeding to finance your ownership, it is important to ascertain if you will have to spend extra for certain services as an owner. Association and assessment charges are the two most common charges in condo ownership. Assessment fees basically cater for services in common areas within the property. Examples include landscaping and works on the hallways, lobby, exterior, garage and parking lot.
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.
About the Author:
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.