How To Sell Your Chicago Airbnb

Everything You Need To Know To Sell Your Chicago Airbnb

Whether you are selling a Chicago property that is an Airbnb/ short term rental (STR) or one that allows for such a use, knowing you have a unique property and properly preparing for the sale will allow you to maximize your sales price.

The key to maximizing value is understanding what information a short term rental investor is seeking.

As an agent who has helped 15+ individuals/ investors purchase a short term rental, I know the information they are looking for to de-risk the investment and allow them to feel comfortable moving forward.

Here I outline the key things you need to consider and be prepared to answer when marketing your property as an Airbnb/ short term rental.

In a traditional sale most of these details would customarily not be shared with buyers until there is an executed contract. However, when selling a property as a short term rental it is best to have all of these details available up front. This will make for a quick and more efficient transaction.

Info Needed to Sell a Chicago Property as Airbnb/ Short Term Rental

Know your Numbers

If you are currently or have previously operated your property as an Airbnb/ STR, sharing your earnings in the listing will set you apart.

I’ve seen a lot of listings that are functioning as an Airbnb but surprisingly getting my hands on the numbers is either very difficult or it never happens. Moreover, when the numbers are eventually provided they are usually an incomplete picture. Don’t let this be you!

Condo Docs

Have a copy of all of the condo docs including the declaration and the rules and regulations (if applicable). Any potential short term rental buyer is going to want to see these documents. They want to ensure there is nothing that limits length of lease or would prevent short term rentals.

If the condo doc language restricts lease length, that would need to be changed for a buyer to feel comfortable.

I’ve helped a couple of my clients change condo docs. With the help of a lawyer it is actually not too difficult nor too expensive. Approximately $1500.

To change the condo docs there are three steps.

1. A vote must take place. The declaration will determine the exact % of votes needed to pass a change. Usually it requires a vote of 75% in favor.
2. Assuming the necessary votes are collected, mortgagees would need to be notified.
3. The revised docs must be recorded with the city.

Neighbors

If the condo docs are in alignment the buyers will usually ask a series of questions about what the neighbors think about having an Airbnb/ STR in the building. Be prepared to answer the following questions:

1. When you started your Airbnb/ STR did you inform the neighbors you would be setting one up?
2. Have there been any neighbor complaints or discussions at board meetings about banning STRs?
3. Has there been any change in ownership recently?  This is especially applicable if the condo docs were changed to allow for STRs.
4. Can you please provide a signed letter from the HOA stating STRs are permissible? Depending on the license the buyer is pursuing this may be required or something that just makes them feel more comfortable.

Meeting Minutes

Buyers will ask to see meeting minutes to see if the topic of Airbnb/ STR has come up. Be prepared to provide them. Providing meeting minutes shouldn’t be necessary until after the property is under contract.

City Requirements/ Licensure

The City of Chicago has pretty strict rules and regulations for STRs. For instance, the City requires all STRs to have a license. If you have a STR, you obviously know this. However, understanding how and when the buyer will get the license in their name is an important problem to consider.

For the buyer this will be top of mind. Without a license they cannot set up a STR which defeats the purpose of their investment. The ideal situation would entail transferring the entire account the license is tied to over to the buyer. However, that is very rarely an option as that would also mean handing over an email account as well.

If handing over the entire account is not an option, the existing license would need to be cancelled. Then the buyer would need to submit an application. The timing of the transfer/ cancellation, whether before or after closing, would need to be negotiated.

Managing Existing Booking

This is only applicable if the property you are selling is currently an active Airbnb/ STR and there will be bookings after closing.

If there are bookings after closing it would be best for you (the seller) to offer to manage those bookings. You would only manage the booking made under your account the buyer would be responsible for the booking made under theirs.

In this situation, the buyer would be entitled to the revenue post-closing. However, you would charge a management fee that is negotiated.

With this strategy the calendar can be let open until you are under contract. When that happens simply block off the dates after the set closing date.

If you are planning to sell, I wouldn’t recommend allowing bookings for more than 6 months out. Plus, having your calendar open 3-4 months in the future would be ideal once the property is listed for sale.

Transitioning Ownership of an Airbnb Account

In some situations the entire listing along with all reviews can be transferred to the buyer. Simply knowing if this is an option for you is sufficient.

Conclusion

As you can see there is a lot of nuance and information to gather, in addition to the standard work that must be done when listing any property.

Most agents do not understand this nuance and how to effectively sell a Chicago Airbnb/ short term rental.

Working with an agent who understands the nuisances will not only make your life easier but should produce more buyers, a faster deal and very likely a higher sale price.

If you have any questions about this process or you are looking to sell a short term rental, please reach out to Alex Cross, your STR expert.

If you are looking to buy a STR check his article here.

Alex can of course help with traditional sales and purchases as well!