If you or your children are renting an apartment in Chicago, then you need to read this.
The Chicago rental market is on fire. Growth in rental rates has far exceeded home sale price growth in many areas of the city, requiring many people, especially younger ones, to spend up to 50% of their income on rent. As wages have not kept pace with rent increases, the possibility of homeownership for your children has become less and less, and farther into the future.
But, you can help to put a stop to this by becoming the landlord for your children and putting the money in your or your kid’s pocket, instead of a landlord’s.
By purchasing a small condo with low assessments and manageable taxes, you or your kids will live in a larger, nicer apartment, you will be the recipient of any market growth, and your kids will have the opportunity to save more money to eventually purchase a home, leaving you with an asset that can continue to spin off cash, or proceeds from a sale.
As an example – the average one bedroom apartment in Lincoln Park or Lakeview rents between $1600 and $2600 per month. This does not include parking or any utilities. If we use $2000/month as an example and add on utilities of $100/month and parking of $250/month, the rent jumps to $2350/month, or close to $30,000 per year!
HOWEVER, if you were to purchase an apartment with one parking spot, that total cost, depending upon the type of building and condition of the unit, could cost in the high $200’s to low $300’s. If you apply a cost of capital (whether you finance or take your money out of the market) at 5% annually, that comes to $13,750 (on a $275,000 purchase) or, about $1100 per month. If taxes and monthly assessments are $225 and $400 respectively, those costs total, $1725. With another $100 for utilities, your total “rent” is $1825, not accounting for any tax benefits or underlying market appreciation. Depending upon how and what you want to charge your kids, their rent, no matter how you slice it, is less than what they would have to pay on the open market.
The real benefit is that YOU own it, YOU control it, and YOU and YOUR KIDS, become the beneficiary of market growth as opposed to a landlord.
If this sounds interesting to you, please contact me. Although the market is hot, I can find you the right deal, where the numbers work, you or your kids have a nicer place to live and you will be left with a cash generating asset to keep or sell.
Please reach out to me at: 224.307.6228 or firstname.lastname@example.org.