Tips for renting out your condo in Chicago!

Renting out your condo can be a great way to generate passive income, but there are key factors to consider to ensure a smooth experience. Here’s a breakdown of things you should do and things you should avoid:

Things You Should Do

1. Review Your Condo Association Rules

• Many associations have restrictions on renting, such as lease length minimums, a cap on the number of rentals, or a requirement for board approval.

• Some condos prohibit short-term rentals (e.g., Airbnb).

2. Understand Local Landlord-Tenant Laws

• Illinois has strong tenant protection laws, so familiarize yourself with security deposit rules, eviction procedures, and required disclosures.

• If in Chicago, review the Chicago Residential Landlord Tenant Ordinance (RLTO) for compliance.

3. Screen Tenants Thoroughly

• Run credit and background checks.

• Verify income (aim for 3x rent) and check rental history.

• Contact previous landlords to avoid tenants with a bad history.

4. Have a Solid Lease Agreement

• Use a lease that complies with local laws and clearly defines rent, maintenance responsibilities, late fees, and house rules.

• If allowing pets, include a pet policy and deposit/fee structure.

5. Price It Competitively

• Research market rent by checking listings on Zillow, Apartments.com, and local property management websites.

• Consider hiring a property manager if you don’t want to handle tenant communication and maintenance.

6. Notify Your Mortgage Lender & Insurance Company

• If you have a loan, check if there are owner-occupancy requirements.

• Update your homeowners' insurance to a landlord policy (rental dwelling insurance) to protect against liability and tenant-related damages.

7. Keep a Maintenance Fund

• Budget for repairs, unexpected expenses, and vacancies. A good rule is setting aside 10-15% of monthly rent.

• Have a list of reliable contractors for emergency repairs.

Things You Should Avoid

1. Don’t Skip Tenant Screening

• A bad tenant can lead to non-payment, property damage, and eviction headaches.

• Avoid renting to friends or family without a formal lease and proper screening.

2. Don’t Ignore Condo Association Rules

• Failing to comply could lead to fines or even legal action from the HOA.

3. Don’t Overprice Your Unit

• Overpricing leads to longer vacancies, which costs more than pricing it correctly from the start.

4. Don’t Collect Rent in Cash Without Documentation

• Use digital payments (e.g., Zelle, PayPal, RentRedi) or checks to keep records for tax purposes.

5. Don’t Violate Fair Housing Laws

• Discrimination based on race, color, religion, sex, disability, familial status, or national origin is illegal.

• Be consistent with screening criteria for all applicants.

6. Don’t Ignore Tenant Communication

• Slow responses can lead to complaints or legal issues.

• Consider hiring a property manager if you can’t be available for maintenance requests.

7. Don’t Forget Taxes

• Rental income is taxable, but you can deduct mortgage interest, HOA fees, maintenance costs, and depreciation.

• Consider consulting a tax professional to maximize deductions and ensure compliance.

Need help, schedule a call with us today to go over all of these issues!