There is no denying the fact that real estate has for long been the go to investment option for people looking for ways to secure their liquid assets from global economic uncertainties. Furthermore, financial institutions are often quick to give mortgages to aspiring homeowners, creating a real estate boom in the process. This article focuses on what the condominium market has in store for would be investors. Read on to learn the options available in the Chicago condo rentals market.
Buying a condo and opting to rent it out is an almost certain way to earn a steady supply of income. However, a number of variables will determine when you get to break even or if the investment is a white elephant. To establish the economic feasibility of your investment prospect, there are numerous calculations that you ought to make.
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 looking to purchase directly in cash, you may not have much to worry about thereafter. The same cannot be said of those looking to finance their ownership using mortgages. In case you fall in this category, you will still have to factor in interest. Most banks use standardized interest rate margins when giving their clients mortgages.
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.
A good way to cushion yourself against getting a bad yield would be to finance your mortgage upfront by between 25 to 50 percent and let the bank do the rest. This lowers the liability on your side and gives you ample room to make repayments within the expected servicing period. The rule of thumb is that any investment that has a positive cash flow is a good investment.
Before you pay for your condo, find out if your ownership will come with occasional monetary obligations. For instance, some require one to regularly part with assessment and association charges. Assessment fees are often geared towards financing certain services in common sections of the property. Such services include renovations on the exterior, parking lot, hallways, lobby, garage and landscaping.
The final major thing to look at is location. You want to purchase your property in an area that has good demand for rental space. Fortunately, most of the places in Chicago are good options. The area has a wide range of clientele, with many of them being college students and working class people. As long as you do your research patiently prior to purchasing, you should have nothing to worry about.
Buying a condo and opting to rent it out is an almost certain way to earn a steady supply of income. However, a number of variables will determine when you get to break even or if the investment is a white elephant. To establish the economic feasibility of your investment prospect, there are numerous calculations that you ought to make.
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 looking to purchase directly in cash, you may not have much to worry about thereafter. The same cannot be said of those looking to finance their ownership using mortgages. In case you fall in this category, you will still have to factor in interest. Most banks use standardized interest rate margins when giving their clients mortgages.
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.
A good way to cushion yourself against getting a bad yield would be to finance your mortgage upfront by between 25 to 50 percent and let the bank do the rest. This lowers the liability on your side and gives you ample room to make repayments within the expected servicing period. The rule of thumb is that any investment that has a positive cash flow is a good investment.
Before you pay for your condo, find out if your ownership will come with occasional monetary obligations. For instance, some require one to regularly part with assessment and association charges. Assessment fees are often geared towards financing certain services in common sections of the property. Such services include renovations on the exterior, parking lot, hallways, lobby, garage and landscaping.
The final major thing to look at is location. You want to purchase your property in an area that has good demand for rental space. Fortunately, most of the places in Chicago are good options. The area has a wide range of clientele, with many of them being college students and working class people. As long as you do your research patiently prior to purchasing, you should have nothing to worry about.
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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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