Understanding the Real Estate Market Today for Selling Investment Properties

Hey Chicago, if you are a multi-unit building nad have been on the market or are considering going on the market soon, then pull out your leases and review them. Here's why:

The bank will base the value on the property off of these leases and the verbage that most Realtors put out there about "below market rents" just won't cut it with the lender. If you aren't at market rent and you have been giving your tenants a break in their rent for staying at the property for so long, that's great but it's not great to your property value. Your property value will be based off of the GRM (Gross Rent Multiplier) and the rents are what support that GRM.

Financing for your property, depending upon the price point, would be best to go under FHA financing. Why FHA? If you neighborhood has been experiencing a decline in value, like most, FHA would require a certain percentage down payment. With conventional financing, the lender will require 5% more down payment and it has been brought to my attention that PMI will no longer be available for investment properties. I would suggest you reach out to your banker or mortgage broker for the latest in guidelines.

And if you want to increase your rents, then increase your curb appeal. There is nothing like curb appeal and a property that has been maintained.

I do rentals in Chicago and I recently rented out two units for one of the neighbors in the Ravenswood GArdens/Albany Park borderline. He put roughly $800 in landscaping and because of that he got $300 more above the crrent market rent per month for the one unit and $150 more above the current market rent for the garden unit. That's $450 a month above the competition! In under two months, because this owner listened to me he netted $4,600 more in rent because of $800 in landscaping. Nice return on your investment, eh?