How To Buy A Chicago Condo For Airbnb
If you want to know how to buy a Chicago condo for Airbnb, we’ve updated this article with all the latest info to get you started.
Short-term rentals (“STRs”) like Airbnb continue to be one of the hottest real estate niches ever so we often get asked about how to buy a Chicago condo for Airbnb. When showing listings one of the first questions we get from buyers is whether rentals are allowed. The next question is almost always whether STRs like Airbnb are permitted.
Is Airbnb permitted?
In a Chicago high-rise, that answer almost always remains “no.” However, some exceptions are out there if you are willing to dig or know where to look.
There are plenty of risks when buying a condo for Airbnb. One of the big risks 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 STRs like Airbnb.
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.
There are now over 2,300 Chicago buildings that 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.
As such, it’s of course critical 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.
Finding the right property for Airbnb
It’s no easy task to buy a Chicago STR. Extensive leg work and dedication is almost always required. Having someone with experience on your side will certainly speed up the process.
Once a property is located and you have an accepted offer, further due diligence is necessary. For example, contacting the HOA to double-check if they are going to be friendly to vacation rentals.
Even if the listing broker remarks in the MLS say “Airbnb friendly,” 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 Chicago 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
As of June 2021 Chicago requires that your property is registered with them prior to hosting on Airbnb or VRBO.
If you enjoy being an Airbnb host and decide to grow your business to more than one unit, you’ll 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.
Six Tips On How To Buy A Chicago Condo For Airbnb
1. Find the Best Location
Like with all things real estate, location is critical for a Chicago STR / Airbnb.
One of the best reasons guests choose an Airbnb listing is its proximity to public transportation. Being close to the CTA means guests start their stay on a smooth and positive note.
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
Ask yourself what work you’re really willing to do.
In an industry that relies on your reputation, handling communications yourself is a good idea. For practical reasons, you may decide to outsource cleaning and room/ unit turnover.
4. Be Best Friends with Your Neighbors and the HOA
Vet each group you would be hosting thoroughly.
Moreover, have rules in place to ensure the neighbors aren’t disturbed. This is the main thing to do in order to avoid inconveniencing neighbors and to keep a great relationship with them.
5. Know the Regulations
Understand and work within the laws Chicago has 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.
6. Check That The Property Cash Flows As A Traditional Rental
Do the math to be sure the property will cash-flow as a traditional rental.
It’s important to be able to make enough renting the unit in a traditional fashion.
This turned out to be VERY important during Covid when demand for Chicago STRs was pretty much non-existent. And even if a pandemic doesn’t disrupt your STR business, you want to have this option should Airbnb ever get banned from the building. You really want to have your bases covered, just in case.
Find The Best Chicago STR / Airbnb Property
We curate a list of properties that have a high chance of allowing Airbnb. From our experience, the average property has less than a 1% chance. Our list has a ~50% chance. Beyond identifying the best properties for STR / Airbnb, we helps clients de-risk and ensure their property will be approved by the city of Chicago before closing.
Buyers can find a Chicago property for Airbnb but it takes a partnership between the broker and the buyer to succeed. Active buyer involvement and the willingness to move on quickly if a deal falls apart during the de-risking process is required.
Contact us if you’re looking for guidance on how to buy a Chicago STR condo for Airbnb.
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.