Owning a home cheaper than renting one in all of the country’s 100 largest metro areas, including Chicago, according to Trulia. In its report, it’s 42 percent cheaper to buy in Chicago than to rent, compared to 9 percent cheaper in San Francisco and 65 percent cheaper in Detroit. It is important to note that when comparing the cost, Trulia factors in the total costs of homeownership (e.g., closing costs, down payment, maintenance, insurance, taxes, etc.) and total cost of renting (e.g., rent appreciation, renter’s insurance, security deposit, etc.). “In Chicago, demand for rental housing is outpacing supply, giving landlords the power to hike rents without losing tenants,” according to Chicago Real Estate Daily. If you’re thinking about renting out your place, or already do, check out our local landlord tips to keep you and your tenants smiling.
Understand the ordinance. Before the lease is signed, provide your tenant with a copy of The Chicago Landlord and Tenant Ordinance (RLTO) (here’s an easy-to-read, tabbed online version). You should, of course, read it thoroughly, too. The guide to RLTO for Chicago Landlords can help you as well—this booklet breaks down the ins-and-outs of the ordinance through a landlord lens, including prohibited lease terms, security deposits, landlord access, and renewal and termination information.
Know the laws, have the forms. Becoming a first-time landlord probably isn’t the easiest transition; there are a lot of little laws that you may not know about. In Chicago, for example, by law you must hold all security deposits in a separate account in Illinois, and put the bank’s name and address on the front of the lease. You must also either change the locks for your Chicago tenant or give the tenant the right to change the locks, according to the recent update of the Illinois Landlord and Tenant Act. Equip yourself with the knowledge and forms you’ll need as a landlord—find out more about the city’s laws with this manual from Chicago Investment Corporation, a not-for-profit mortgage lender that focuses on loans for multifamily units in the Chicagoland area.
Communicate simply. Squared Away Chicago, a Web-based mobile phone app, has designed a new tool to help renters and landlords stay in touch. According to the Chicago Tribune, this app allows a “tenant with a smartphone to take a time-stamped photo of a problem inside an apartment and send it, along with a form letter explaining the problem, to a landlord.” Whether it’s a leak in the ceiling or a broken refrigerator, you snap a picture, rate the severity, and leave the landlord the best time to come by to correct the issue.
Even if you don’t opt for the app, the same rules apply—keep communication open and flowing. If a problem arises, be sure your tenant knows how to get in touch with you, so that you can fix the issue promptly.
Give your tenants ample notice. Your house is still yours, but once you become a landlord, you don’t get to come and go as you please. By law, you must contact your tenant by phone or mail for access two days in advance of stopping by. In the event of emergency, or where repairs elsewhere unexpectedly require access, the landlord must provide notice within two days after entry, according to the Lawyers’ Committee for Better Housing, Inc.’s Chicago Renters’ Resource Guide.
Have back-up. Once you’re filling the landlord role, you’ll realize that you’ve become the handyman, the plumber and the maintenance person—you do it all. Unless, you invest in a handyman. Whether it’s adding a deadbolt to a door, changing the batteries in the smoke detectors or repairing bathroom tiles, a handyman has your home’s back. And if you go through a credible Chicagoland handyman service they typically have a handful of professionals to help with the electrical, carpentry, plumbing and building maintenance.
Be sure you’re covered. Even though you probably already have homeowners insurance, when you become a landlord, you’ll need a little more coverage—landlord property insurance. Allstate’s Landlords Insurance Policy is specifically designed for a rental property and the risks faced when you rent, including property damage, injuries on property and lost rental income. Think wind and hail damage, colapse of a building, or water damage from plumbing. If your tenants have to move out because you have to repair your property, Fair Rental Income could keep the rental income flowing in for up to 12 months while repairs are being made. You’ll want to save up, though—insurance for a rental may cost more than your homeowners coverage.
Upgrade your property. Upgrades can make it easier to rent out your property and get the rent payment you really want for your home. According to Northbrook, Ill.–based Prime Property Investors (PPI), if you’re constantly upgrading and maintaining your place, you can reasonably increase your rent and residents are likely to pay more because of the upgrades. In the city of Chicago, you will want to be sure you keep your upgrades are within code.
Preparing yourself for the role of landlord might be the hardest part—knowing the laws, writing up the lease and staying on top of repairs. Thankfully, you can easily make your leaser and leasee relationship a happy one by being upfront and keeping the lines of communication with your tenant open and honest. Once you know what to expect, you’ll be able to swap stress for smiles.