Archive for the 'Tips' Category

Find a Legal Home Away from Home

Saturday, July 13th, 2013

Ever heard of the sites like HomeAway of FlipKey? They exist so that home or condo owners can essentially swap residencies with other owners, often for a vacation or short sabbatical. And while it sounds like a simple enough exchange, there are considerable legal implications to consider if you’re planning an exchange within Chicago city limits.

The concept seems simple enough: list your condo or townhome as “vacation rental” in Chicago and you’re good to go. Not so. Here in Chicago, it’s illegal to list or rent your unit in this manner without a Vacation Rental License.

Okay. Get a license—no problem. But keep in mind there are several steps involved in this process.

Obtaining this license starts with filling out an application at the Department of Business Affairs and Consumer Protections; your unit must then pass an inspection by the Department of Buildings and then the Department of Zoning will conduct a board review. There’s also the matter of a $500 biannual fee (that’s $1,000 every year) due for each location you want to list as a Chicago vacation rental.

If this process surprises you, keep in mind that renting your condo or townhome to short-term occupants is completely different than subletting. If you have a landlord and want to exit your lease before the agreed upon date, you’ll have to sublease it. This process is done between you and your landlord with the stipulations possibly outlined in your initial lease.

In spite of the licensing process required, vacationers can find numerous Chicago condos for short-term rental throughout the city. Most of these can be booked on a night-by-night basis, though many have a minimum night stay requirement, usually anywhere from 2-4. Surprisingly, there’s a lot of option in the aesthetics and features of popular Chicago condo rentals, too, from simple studios and one-bedroom units to more elaborate floor plans housed in full-amenity buildings.

So if you’d like to explore renting your condo for a short-term vacation, start a conversation with your Chicago real estate agent—they’ll get you started on the right path.

Pet-Friendly Amenities

Wednesday, July 3rd, 2013

Pet-friendly housing in Chicago is increasingly becoming more common throughout the city. The fact that our furry friends are becoming less of an issue, makes buying a home in Chicago more appealing to pet owners and those who have thought about becoming one.

Gone are the days of city dwellers living in less desirable places that have pet-friendly policies or a landlord who doesn’t care enough if you sneak them in.  And it’s no surprise that this change is taking place, with an estimated 164 million pets sharing a home with humans in the U.S. today. According to KC Theisen, director of pet care issues for the Humane Society, in a Chicago Tribune article, landlords would eliminate nearly 50 percent of America from the tenant pool if they didn’t allow pets into their properties.

A great example of this growing trend in real estate is a recent listing for a 2-bedroom apartment at 652 W. Aldine Avenue that grabbed national attention when each photo featured a cute, brown dog gazing at the camera while depicting features of the property. The pictures were picked up by pop culture website BuzzFeed.com and even appeared on Good Morning America. Tenants John and Sara Kanive, overwhelmed by the surge of responses, rented their apartment in less than 24 hours.

Of course, pet-friendly amenities come with strings attached. Pets increase the chance of damage to the property and landlords need to figure out a way to deal with noise, outdoor waste, and interactions with those other tenants who don’t like dogs. One solution for property-owners is to “interview” prospective tenants’ pets and outline rules and regulations throughout the lease. Renters can provide evidence of shots, training, veterinary reports, and proof of proper care.

Two Chicago condos that are pet friendly include 925 W. Darkin, a rehabbed vintage building in Wrigleyville, and the Echelon at K Station, a luxury apartment tower with a nearby dog park and occasional activities designed especially for your pooch.

These are just two of the many properties in Chicago welcoming your cute companion. There’s no doubt that pet-friendly homes in Chicago will continue to increase and be welcomed by the growing pet lovers throughout the city.

Security for Chicago renters in foreclosed buildings

Saturday, May 25th, 2013

Illinois currently holds the dubious distinction of ranking third in the nation for number of foreclosed properties. While foreclosure activity in the city declined in the first quarter by roughly two percent from the previous quarter, and was down 4.5 percent from the year prior, there remains a glut of foreclosed inventory on the market.

For those who live in a Chicago rental, these statistics leave them wondering what happens to them if their building happens to enter foreclosure.

One of the biggest challenges for renters is a sheer lack of information. In far too many cases, renters are the last to know that the building in which they reside is being foreclosed upon—they’re often tipped off to the fact by a random email, phone call or, in the most extreme cases, a knock on the door from interested buyers.

At that point, there isn’t much a renter can do except understand the time frame of the transaction and prepare for the possible consequences.

Here in Illinois, the foreclosure process takes about 7 months to complete and is initiated after 3 months of missed mortgage payments. In the time leading up to a foreclosure auction, the current landlord still owns the property and it’s imperative that renters continue to pay rent. As long as the landlord owns the property, any contract between renters and landlord are still legally binding. According to the Protecting Tenants at Foreclosure Act of 2009, landlords have to give tenants a 90 day notice prior to asking them to vacate the premises.

In addition to the Protecting Tenants at Foreclosure Act of 2009, Chicago has recently introduced new legislation that further protects local renters who find themselves in foreclosure situations.

The City Council’s housing and real estate committee have proposed that lenders who repossess any dwelling, be it a high-rise or single-family home, will have to either pay tenants $12,000 per rental unit for moving costs or offer them a new lease with an annual rent increases of no more than 2 percent. This proposal would only be applicable to entities that acquire a rental building during a court-ordered foreclosure auction. This does not apply to private investors who may purchase the building after the auction. Currently, 90 percent of foreclosures return to the lenders upon completion of the foreclosure process.

Of course, the city is still working out the kinks in the proposed legislation and there is much opposition from lenders and the Chicago Association of Realtors due to possible effect on local real estate market, the city’s transfer tax collections, and the fact that it could make renting even more expensive.

Money-Saving Amenities for Your Chicago Condo

Friday, May 10th, 2013

When hunting for a new Chicago condo, one is always going to seek out the best unit, in the best neighborhood with the best amenities. The truth is, most are hoping for a collection of amenities that make life simpler and, in many cases, can help save hundreds of dollars every single month.

Wondering what amenities could save such sums? Consider these examples.

Community Gym: Having a gym on-site eliminates a pricey gym or fitness club membership that can cost anywhere from $30-$100 or more per month. Some communities also have walking paths or a pool which is great exercise as well. Besides the cost of a gym membership in and of itself, residents can also enjoy the convenience of having their gym just steps away, meaning they save on gas and time, too.

BBQ Stations: Many condos have BBQ stations or pits already in place—in shared courtyards or even on rooftop decks—for residents to use whenever they’d like. Not only does this let residents have an impromptu part, it means they don’t have to worry about buying their own equipment.

Business Center: In an age where business is so often done remote, a community business center is more than a simple convenience. These conference-type areas generally provide computers, Wi-Fi access and printers stocked and ready to go. Furthermore, for some, having a conveniently located business center means avoiding the local Starbucks as office, which could mean buying fewer daily lattes.

Community Perks: Condo communities often offer a variety of perks and benefits to living there. Some residences host community parties or events that offer free entertainment, food or other fun activities. Some associations even provide their residents discounts at local restaurants and businesses.

On-Site Party Room: You may not use the community party room often, but if and when you do use it, it’s going to save you a good amount of money. If you’ve ever rented a venue for a birthday party, bridal shower or family reunion, you know how costly it can be. If you’re planning to host a party, utilizing your building’s party/club room could potentially save hundreds.

Wondering what Chicago condos offer such amenity packages? Check out The Legacy, at 60 E. Monroe Street, offering a fitness center, pool and spa, sky garden lounges, and hospitality rooms. Or stop by Aqua, at 225 N. Columbus Drive, where residents enjoy a fitness center and spa, business center, sky garden lounge, private club suites with catering kitchens and a media room.

And make sure your Chicago real estate agent knows which amenities are most important to you!

Ready to invest in Chicago real estate?

Friday, May 3rd, 2013

According to a recent Chicago Curbed interview with Matthew T. Bowles, “conditions in Chicago are currently primed for potential property investors to find success.” Bowles is a partner at the Maverick Investor Group in Nevada and suggests that smart investors are keenly focused on Windy City real estate.

But while conditions in Chicago are now perfectly primed to support real estate investment, the decision to purchase an investment property can still prove quite risky. A savvy investor who does their research, however, stands to benefit greatly from an investment property, whether it’s an income boost from rent or the selling of your property, appreciation, tax benefits, or leverage in their dealings with bank lenders.

First-time investors should always be sure to consult with an investment real estate professional or lawyer who is well versed in local real estate laws before diving into what can be a very convoluted and tricky process. Decide ahead of time how much of a commitment you are willing to make to your Chicago investment property—will you be a landlord or a more laissez-faire “turnkey” investor?

Chicago is a particularly attractive real estate scene for investors, thanks in part to its unusually high frequency of renters—55 percent of Chicagoans rent, while nationwide renters average about 33 percent. This inordinate percentage of people who rent in Chicago can be attributed mostly to the long and labored recession, which has shaken the confidence of Windy City residents and prompted them to seek out more impermanent housing solutions for the time being.

This phenomenon has plagued the entire country, although Chicagoans seem to be affected by their mistrust of the housing market more than others. Still, according to a survey recently conducted by Hart on behalf of the MacArthur Foundation, 57 percent of American adults think that buying a home is less appealing, while 54 percent think renting has grown in its appeal. A shocking 45 percent of homeowners said they could see themselves as renters at some point.

But its overabundance of renters isn’t the only thing about Chicago’s real estate scene that increases its appeal in the eyes of investors. According to Bowles, smart investors from around the world are drawn to Chicago, “because of the comparative value proposition, not to mention the fact that it is an international destination city and one of the largest and most diversified economies in the U.S.”

Even in such an investor-friendly atmosphere, however, one must always be careful to choose their properties wisely. If you’re preparing to buy a Chicago rental property, pair up with those in the know and make sure to educate yourself as much as possible on local landlord/tenant law.

Keep Your Condo Association Honest

Monday, December 24th, 2012

Property managers hold a great deal of responsibility—but in some cases, managers choose to take advantage of their positions, which give them access to funds with very little direct oversight.

While most of these individuals are hardworking and honest, there are numerous documented cases in which managers have embezzled funds into personal accounts and left the condo association or building high and dry. Of course there are preventative measures that can be taken to better ensure that this situation never arises.

If you’re a member of your condo’s board (a position worth looking into), it’s your right, and absolutely in your best interest, to keep in touch with the association’s attorney, property manager and insurance agent in order to map out a plan in order to avoid any financial hiccups.

  • Properly vet the incoming/current property manager. Ask the incoming management company and individual property manager to submit credit reports prior to their start date. If they truly desire your business they should have no qualms submitting to the credit checks.
  • Keep a close tab on the funds. There are two pools of money in community associations: operating accounts and reserve accounts. Reserve accounts should be under strict control of the board. Only board members should be allowed to write checks or transfer funds from this account. In regards to the operating account, there should be a set dollar limit that requires the property manager to obtain board approval and signatures in order to release funds. Any check that exceeds the allotted dollar amount for monthly bills should require board approval. While bothersome, this is the only true way to enact checks and balances.
  • Find out if the management company is protected from employee error. Make sure your management company has a fidelity bond that insures coverage from employee negligence. Similarly make sure that your association is named as an additional insured.
  • Keep the funds in separate bank accounts. It’s imperative that operating and reserve funds are kept in separate bank accounts in the name of the association. Make sure that the property manager isn’t combining funds with other properties or even worse, his/her personal account.
  • Ask to see the monthly numbers. Ask that your property manager is supplying the board with monthly financial status report. These reports will certainly include actual copies of the association’s bank statements. The board’s president or treasurer should be receiving official monthly or quarterly statements directly from the bank to avoid any confusion or human error.

 

Renting in Downtown Chicago Could Cost You

Friday, December 21st, 2012

As many are still shell-shocked from the real estate woes brought on by the 2008 bust, renting will remain a popular option for the foreseeable future in Chicago. As a result, apartment rents have been steadily rising—and will continue to do so amongst the top levels of the rental pyramid in Chicagoland. Among the lower levels, rents will remain fairly flat.

In the fancy luxury buildings of the downtown area, rents are roughly 7.5 percent higher than they were this time a year ago. The most exclusive buildings are charging around $2.58 per square foot, and a few have gone as high as $3.00 a foot. These per-square-foot rates are at an all-time high.

Following the “superdeluxe” buildings are what is known as Class B buildings. These properties have rents that are up roughly 5 percent, with their square footage charges varying greatly. The level below that, which covers apartments in struggling areas, saw a 2.5 to 3.5 percent increase in rent over this time last year—after almost a decade with no movement in rental charges.

At the lowest level, rents are flat, and are likely to remain that way until a full economic recovery takes hold. These apartments are located in areas plagued by high unemployment, making it difficult for landlords to find tenants who can actually afford to pay rent.

Demand for rentals is very high in mid-level areas like Hyde Park, but unlike the downtown area, rents won’t go any higher than inflation.

So what is truly behind the rising rents, and why the disparity among “levels”? The economy is what seems to be driving the wildly increasing rates. Movement in the top three levels is primarily dictated by employment and income growth. Renters at the top levels are usually college-educated, and the unemployment rate for this group of people is pretty low, around 4.5 percent. This, combined with the high demand for downtown rentals is what has driven luxury rental prices sky high.

3 Reasons to Buy Your New Condo Before Year’s End

Wednesday, December 19th, 2012

With less than a month left in 2012, the time you have to benefit from year-end home buying tax benefits and other financial perks is quickly winding down. Here are a few must-know insights that will prove helpful for any Chicago condo purchase you’re planning to make in the near future.

End-of-year tax benefits.
Making a new condo or home purchase before the end of the year makes you eligible for several tax benefits, including:
· Mortgage interest deduction: This benefit allows you to deduct the interest you paid on your mortgage during 2012. Interest is deductible only on the first one million dollars of debt. While you won’t see much of a kickback from this tax benefit in 2012 because the year is almost over, you will most certainly surely appreciate this benefit in 2013.
· Mortgage insurance premium: If your down payment is relatively small (less than 20%) and requires private mortgage insurance, the interest on those payments may be tax deductible. Income restrictions do apply, however.
· Mortgage points: If you decide to pay points on your loan, each paid point is deductible the year it is paid.

Record-low interest rates.
Rates are at historic lows, and have been that way all year. But with looming concerns over the “fiscal cliff” and the uncertainty around next year’s rates, now may be the best time to take advantage of a new mortgage.

Down payment funding.
With capital gains tax expected to rise from 15 to 20 percent in 2013, cashing out stocks and mutual funds and using that money for a down payment now may be your best bet to ensure the largest return on your money.

Chicago’s best neighborhoods are already seeing an increase in demand for new condos and homes, with prices slowly ticking upwards, new construction underway and the number of foreclosures stabilizing. So if you’re feeling that now is the time for you to buy, get in touch with your Chicago real estate agent and make it happen before 2012 is gone!

Hopping Through Hoops for Chicago Condos

Friday, November 9th, 2012

Are you looking to buy amongst Chicago condos for sale? Are you self-employed? While affirmative answers to these questions may not have disqualified you from a mortgage before, they certainly have the ability to do that today.

Fannie Mae is responsible for setting the standards for a large part of the home loan market, and they’ve changed a number of their requirements for new mortgages. Chief among them are changes to condo buyer requirements and qualifications, and changes in requirements for self-employed borrowers.

For Condo Buyers
Fannie Mae is implementing a newer version of its automated underwriting system, called Desktop Underwriter. This new system will require condo buyers who put less than 20% down on a new home to fill out a questionnaire about the homeowner’s association’s finances and provide information about its savings. In the past, applicants were only required to submit this info if they put less than 10% down on a property.

The reason behind the change? Fannie Mae wants to be confident in the stability of the homeowners association. So the mortgage lender will now review the association’s budget, including individual line items, income and expenses. This thorough review is meant to examine whether or not replacement reserves and insurance deductibles can be funded.

For Self-Employed Borrowers
In the past, self-employed borrowers were only required to supply one year of tax returns. Now, these borrowers will need to pony up two. The reasoning? The housing crisis has made the lender more cautious about who they lend to and they’d like to ensure that the borrower can actually afford the loan for which they’re asking.

Critics say they could be stifling housing market growth, but Fannie Mae maintains that they just want to make sure borrowers are able to sustain the loan over the long haul.

Beware the Secret Fees and Regulations of Chicago Condos

Monday, October 29th, 2012

Buying a condo means you own the particular unit that you purchased, and you have the right to pretty much do anything that you please with that space—so long as it falls neatly within the condo association’s rules that govern the building.

Because of the power they have, some associations have completely taken advantage of its owners, making them financial prisoners to their will. The most common way this is accomplished? Through the elusive “fee” that can change at any given moment, depending on the circumstances of your situation. In particular, the most confusing condo fee is the move-in/move-out fee.

Billed as a necessary charge to protect the building from the wear and tear of moving large furniture through its halls, the move-in/move-out fee has become the bane of some owners’ condo experience. Because the rules are so vague surrounding this fee, determining when and if it’ll apply to you is a pretty daunting task, in some cases.

And that’s how they get you.

Let’s say you have a guest coming to stay with you for a few weeks. Obviously, this guest is bringing luggage with them. But, let’s be honest here: This person is not bringing a couch, refrigerator or other large item into the building, just a few suitcases. Should this person have to pay a move-in/move-out fee? Common wisdom would probably lead you to say, “No,” but your condo board may see things a little differently. They could actually charge you anywhere from $100-$500 dollars, the average move-in/move-out fee in Chicagoland.

Or let’s say you were married and your spouse died, and you later found someone new. Would the association charge you a move-in fee for your new partner, and a move-out fee for your deceased partner? They shouldn’t, but within the confines of the condo association, they may very well opt to do just that.

While these situations may seem extreme, they are all very real, and have been actual issues within condo associations. Sometimes truth is stranger than fiction, and the best way to protect yourself from a fee-happy condo board is to research the board’s practices before you buy. Talk to owners that already live there, try and get your hands on the minutes and if possible, take a look at their financials.

And if you find yourself already in a situation such as those described above, don’t accept imposing fees as your fate. Talk to a building manager or board member one-on-one; make your case and you may find that fees can be waived.