how to buy a Chicago condo for Airbnb

How To Buy A Chicago Condo For Airbnb

Airbnb has become one of the hottest real estate niches over the past few years so I often get asked about how to buy a Chicago condo for Airbnb. When showing listings one of the first questions I get from buyers is whether rentals are allowed. The next question is almost always whether Airbnb hosting is permitted.

Is Airbnb permitted?

Chuck Gullett

“As with any investment property, the key to success is making the right purchase.”

In a Chicago high-rise, that answer is almost always “no.” But there are some exceptions if you are willing to dig into it or know where to look.

Condo Rules

The risk to the investor is that condo rules can change, especially if issues arise with short-term, vacation-type rentals in the building. The building’s HOA doesn’t even have to amend its bylaws to restrict Airbnb.

City Regulations

The City of Chicago Shared Housing Ordinance bans vacation rentals in buildings registered on the City’s House Share Prohibited Buildings List. And it is as simple as filling out a form to have a building added to this list.

Currently, more than 2,200 buildings restrict owners from using their condos/units for Airbnb purposes, and violations can lead to fines ranging from $1,500 to $3,000 per offense.

Therefore, it is very important to locate properties that will not only give you some assurances that using your condo for Airbnb is okay, but to also work with the condo board before policies can change. The next step is to find the right property.

Condo to Airbnb

One of the Chicago airbnb condos Alex Cross owns and operates.

 

Finding the right property for Airbnb

This is no easy task and extensive leg work is usually required. Having someone with experience on your side will certainly speed up the process.

Due diligence

Once a property is located and you have an accepted offer, further due diligence is necessary, such as contacting the HOA to double-check if they are going to be friendly to vacation rentals.

Even if the broker remarks in MLS say “Airbnb friendly,” you know the drill: double-check everything!

Advertise on city-approved platforms

After closing the sale and decorating the place like you are a finalist on Design Star, you are required to advertise on the City-approved platforms (Airbnb, VRBO, HomeAway, etc.).

Each shared-housing unit (SHU) is required to be registered with the City. The process of registering is as simple as listing the unit on one, or all, of these platforms. The good news is as soon as you apply for registration you are allowed to host.

Registering your Chicago Airbnb

In the meantime, the City will review your pending application and either approve or deny it. If you do get a denial, you can keep hosting as long as you appeal. And usually, if you receive a denial, the City is just looking for you to provide them with additional information.

As long as you know how to respond to the denial and promptly provide the City with the necessary information, approval is usually granted. Now, you are well on your way to finding your first 5-star guest.

If you find your calling as an Airbnb host and decide to grow your business to more than one unit, you will then become what’s known as a “Shared Housing Unit Operator.” As such, you must take an extra step and become licensed with the City. To do so is just a matter of filling out a form and paying the annual fee.

Alex Cross

At Best Chicago Properties, our Airbnb expert is Alex Cross.

Our Airbnb expert is Alex Cross

At Best Chicago Properties, our Airbnb expert is Alex Cross. Alex is an experienced broker who has located many Airbnb properties for our clients. He also happens to be a successful Chicago Airbnb host.

When the tough Airbnb questions arise, I defer to Alex. So I asked Alex for his best advice for those looking to be an Airbnb host.

Tips On How To Buy A Chicago Condo For Airbnb

Here are his five best (and truly commonsense) tips based on his experience as an Airbnb host:

1. Find the Best Location

“One of the best reasons guests choose my Airbnb listing is its proximity to public transportation. Being close to the CTA means my guests start their stay on a smooth and positive note,” explains Alex.

2. Consider Variations in Seasonal Traffic

“Location is second only to season. The peak season in Chicago is May to September, and that should be considered in your budgeting.”

3. Determine Which Tasks You’ll Do Yourself

“I handle all guest communications. I have certain standards when it comes to response time and messaging that I want to uphold.” In an industry that relies on your reputation, this is a good idea. Alex was also quick to point out that, for practical reasons, he chooses to outsource cleaning and room/unit turnover.

4. Be Best Friends with Your Neighbors and the HOA

“I vet each group [that ask to stay/that I would be hosting] thoroughly, and I have rules in place to ensure the neighbors aren’t disturbed. This is the main thing I’m doing to avoid inconveniencing my neighbors and to keep a great relationship with them.”

Alex also adds: “Another important factor I considered was if I would be able to make enough renting the unit should Airbnb ever get banned [from the building]. You want to have your bases covered, just in case.”

5. Know the Regulations

“Chicago now has some laws regulating Airbnbs. Prior to purchasing a property, familiarize yourself with these laws or consult an expert to better understand them. Doing so will allow you to ‘de-risk’ the investment.”

Contact Alex Cross if you’re looking for guidance on how to buy a Chicago condo for Airbnb. And if you need help setting up, managing or optimizing your short term vacation rental check out his site Vacation Rental Advisory.

And by the way, if you’re considering buying a house instead of a condo for Airbnb, check out our tips for buying a house for Airbnb in Chicago.

About the Author:
Licensed since 2005, Chuck Gullett is the managing broker at Best Chicago Properties in Chicago’s West Loop. He is consistently recognized as a Top Producer and has a true passion for real estate. Chuck is also the owner of ThreeSixtyChicago specializing in real estate photography. This article appears in the January 2020 edition of Real Producers Magazine. The original version of this article was published by Best Chicago Properties, LLC on November 15, 2018.