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.
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 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.
A mortgage is poised to be a headache to work with as you will have to use your rental income to service it over a length of time. If the projected cash flow from your condo appears too little, you might want to hold off on purchasing it. Remember interest always rises with an increase in repayment time.
It is only advisable to apply for a mortgage if one has the means to finance between a quarter and a half of the total amount upfront. This helps lower the repayment window and amount. The general consensus in loan financed investing is that if the expected cash flow is not negative, the investment is viable.
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.
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 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.
A mortgage is poised to be a headache to work with as you will have to use your rental income to service it over a length of time. If the projected cash flow from your condo appears too little, you might want to hold off on purchasing it. Remember interest always rises with an increase in repayment time.
It is only advisable to apply for a mortgage if one has the means to finance between a quarter and a half of the total amount upfront. This helps lower the repayment window and amount. The general consensus in loan financed investing is that if the expected cash flow is not negative, the investment is viable.
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.
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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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