House hacking has become a popular way for homeowners to generate additional income by renting out a portion of their home. There are many options to house hacking, from renting out rooms in your single family home to the more lucrative & effective way by investing in a multi-unit building.
You can purchase a 2-4 unit building as an owner occupied buyer and obtain an FHA or other government backed loan to purchase a multi family propert. You can have a home in one unit and then use the additional units as a house hacking way to generate additional income while living in your own home.
By utilizing one unit as an Airbnb, one as an owner unit, and the remaining units as permanent rentals, you can find a great short and long term strategy all in one building.
This strategy allows homeowners to generate significant rental income while living in their own home.
The key to successful house hacking via a multi-unit building is to find a property that is in a desirable location, has multiple units, and is in good condition. Once you have found the right property, you can begin planning your use for each unit.
In Chicago, only one unit can be used as a short term vacation rental, like VRBO or airbnb. This is due the Chicago's vacation rental ordinance. Here’s what you need to know about operating a legal Chicago vacation rental:
You must submit an Application and License Fee of $500 to the city (that’s an annual fee).
If your unit is subject to restrictions by a homeowners association or board of directors, you must attest that the association or board has not adopted bylaws prohibiting the use of your unit as a vacation rental.
You must purchase homeowner’s fire, hazard, liability insurance, and general commercial liability insurance with limits of not less than $1,000,000 per occurrence, as mandated by code.
Your unit may be inspected by the City of Chicago Department of Buildings. Additional costs might flow from the inspection in mandated renovations, repairs, and associated permitting fees.
Registration applications that are awaiting approval or that are being appealed by the City of Chicago will be unable to host until they are authorized.
A rule of primary residence or a commissioner's adjustment under Section 4-6-300(1) permitting otherwise must been obtained.
You can find more info here; https://webapps1.chicago.gov/chicagohouseshare/static/House%20Share%20Quick%20Reference%20Guide.pdf
You will likely have some renovations for each unit but for the airbnb you will also have to furnish the unit and plan out the most eye catching decor. A home with a story and even a theme can help you stand out above the rest.
Updating the décor, adding amenities such as a fully equipped kitchen, suggestions for best local restaurants and nightlife and ensuring the unit is clean and well-maintained.
The permanent tenants should be selected carefully and a background check imported. You will want to secure a 12-24 month lease. You can use a rental service or a full time Realtor to help you market the property and do the paperwork and background checks. Of course, the key to any successful long term tenabt should be reliable individuals who will pay rent on time and maintain the unit in good condition. It is important to establish clear communication with all tenants to ensure that any issues or concerns are addressed in a timely manner.
By utilizing one unit as an Airbnb and the remaining units as permanent rentals, you can maximize your rental income and create a sustainable source of passive income. With careful planning and execution, house hacking can be a profitable and rewarding investment strategy for homeowners.
Lynn Reidl, Broker with @properties Christie's international real estate, offers master courses that you can sign up for after you register to receive her free digital download of the Top 8 strategies to a winning vacation rental property. To get that free starter kit, please register, Yes, sign me up!
Then if you'd like to take the online master course, you will receive and email to register for the next available time slot.
Beverly Bahm and Lynn Reidl help current Portage park residents and those looking to move to the area with their real estate investment + specialize in the benefits and essential data needed for home ownership. They stay on top of the current trends in the housing market at a hyper local level and are creative thinkers willing to help you at every step of the process.
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