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.
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.
To begin with, some of the things to look at include insurance costs, maintenance expenses and taxes against the projected annual rental income. These costs are liabilities and are poised to eat into your profit, if any. Other expenses to bear in mind include legal assistance when carrying out evictions and advertising. It is important to note that in US law, both tenants and landlords have their rights.
If finances are not a problem and you simply intend to buy your property in cash, you should enjoy a smooth sailing during ownership. On the contrary, one who opts to buy using a mortgage is bound to encounter many challenges thereafter. For one, there is the interest charged on the mortgage to bear in mind. Nevertheless, most financial institutions offer standardized rates when calculating their interest.
An investor using a mortgage basically has to calculate how long it will take to repay it based on the projected income of the rental. If the income will be too little to service the loan within the shortest time possible, it may be a bad investment. Interest rates appreciate as one takes longer to service a mortgage.
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.
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.
To begin with, some of the things to look at include insurance costs, maintenance expenses and taxes against the projected annual rental income. These costs are liabilities and are poised to eat into your profit, if any. Other expenses to bear in mind include legal assistance when carrying out evictions and advertising. It is important to note that in US law, both tenants and landlords have their rights.
If finances are not a problem and you simply intend to buy your property in cash, you should enjoy a smooth sailing during ownership. On the contrary, one who opts to buy using a mortgage is bound to encounter many challenges thereafter. For one, there is the interest charged on the mortgage to bear in mind. Nevertheless, most financial institutions offer standardized rates when calculating their interest.
An investor using a mortgage basically has to calculate how long it will take to repay it based on the projected income of the rental. If the income will be too little to service the loan within the shortest time possible, it may be a bad investment. Interest rates appreciate as one takes longer to service a mortgage.
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.
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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