Monthly Archives: June 2012

10 Situations You Should Plan For as a New Chicago Landlord

Cartoonstock.com cartoon - worst case scenarioMost new landlords think through the steps involved in finding a tenant, but they rarely plan on what to do in the event that a major catastrophe or minor disturbance alters the flow of the occupancy. After 7 years in the rental market I can attest that every one of the 10 items on this list has occurred, sometimes on multiple occasions. I’m not going to tell you what your contingency plans should be, although I have served as a sounding board before in helping landlords hash out their worst case scenarios.

In all of these cases make sure that you know the city laws about what you can and cannot do, have contacts handy in your files who can handle the repairs, and know what your timeframe and potential cost will be is to resolve the issue. Make sure you’ve taken all the necessary preventive measures to keep these situations from occurring, without hindering your tenants’ ability to live comfortably in their apartments. Figure out what insurance will cover. Figure out what your liability limits are. Having a plan in place will help you to keep your head about you and your wallet close to intact in these admittedly stressful scenarios.

Photo of fire damage caused by a space heater

Fire damage to a Florida apartment caused by a space heater.

1. Fire that damages a unit. 90,500 apartment fires break out per year in the United States. In 2010 that came to 440 deaths, nearly 4000 injuries and over $1b in property damage. (Source: [1]) 36% of all US fires in 2010 were to some sort of building, as opposed to wildfires, dumpster fires, cars, etc. (Source: [2]) Regardless of if it’s a small grease fire that can be extinguished with a kitchen fire extinguisher or a space heater that arcs on an overloaded outlet, it’s always possible that one of your apartments will be damaged by fire.

Skyline shot of Chicago apartment building on fire

3 alarm fire at 885 W Cornelia, summer 2011

2. Fire that destroys the building. A single apartment on fire is one thing. Losing an entire wing full of apartments, or worse, seeing your property condemned due to fire, is an absolute disaster. This is, oddly enough, one of the few scenarios that new landlords will actually plan for as it’s a pretty extreme “what if.”  Fires are tricky things to contain. A careless neighbor, vagrant or neighboring pizza place could take out your building. Make sure you’ve planned for fires both big and small. (more…)

Square footage, room counts and other lies my agent told me

Back in 2007 I received an interesting email from a local landlord in response to one of my Craigslist ads for an apartment:

Just a word of advice, if you say it’s 930 square feet no one is going to come to see it.  You’re in competition with landlords who would describe this apartment as at least 1300, 1400 square feet.  Tenants’ expectations of square footage are inflated because they’re judging square footage by what they’ve seen.  Describe this place as 1300 square feet and you’ll get more traffic.  They don’t have to rent it if they don’t like it.  Good luck.

The floorplan of the apartment in question.

The floorplan of the apartment in question.

Square footage is for engineers. Room sizes are for the rest of us.

I had measured this apartment, CAD rendered the floorplan – it was 930 usable square feet, give or take a few. I spoke with my client at the time and discussed this feedback with him. He and I agreed to continue listing the actual measured square footage. Neither of us wanted to waste our time or the time of prospective tenants who “didn’t have to rent it if they didn’t like it.”

So let’s get things straight. I’ve measured thousands of apartments and CAD rendered the results. Here’s what I’ve found:

  • Standard Chicago vintage studio: 200-400 sq ft.
  • Standard Chicago vintage 1 bed w/ eat in kitchen: 400-600 sq ft.
  • Standard Chicago vintage 1 bed w/ dining room or smaller 2 bed: 550-800 sq ft.
  • Standard Chicago vintage 2 bed w/ dining room 700-900 sq ft.

Above measurements are for Pre WWII walk-up buildings. Anything larger than that and the agent is either counting walls as part of the area or just guesstimating based on how the space “feels.” (more…)

Rent Bacon: April 2012

Rents once again increased over last year, and market times decreased in 2 out of 3 zones. (corrected July 2012)

Details for April 2012

The downtown mid-north side zones continued their patterns of serious rent increases and shortened market times in April. However, it is interesting to note that in both Zone 1 and Zone 2 the number of MLS-listed 2 bedroom apartments actually decreased slightly year-over-year. This makes sense in a strong landlord’s market, as landlords are finding success in renting on their own this year.

Also of note – this is the first time that we’ve seen the average market time in any zone fall below the 1 month mark. In this case, it was Zone 2, with an average market time of 31 days. When dealing with rentals, paid in one month increments, the difference between a 31 day market time and a 32 day market time has a major impact on cash flow and therefore on relative value.

While Rent Bacon normally looks at year-over-year data, this month it’s also worth looking at the month-over-month growth when compared with the rent rates for March. Zone 1 saw a 10.4% month-over-month increase in rents, Zone 2 up by 1.7% and Zone 3 up by 3.8%. The zone 3 increases are particularly worrisome considering that Zone 3 neighborhoods are usually the least expensive options available to lower-income tenants. Some of the rent growth can be attributed to April being the first “on-season” month in the Chicago rental market, but not all.

Average RentAverage Market TimeTotal Rented
Zone 1
April 2011$230744 days229
April 2012$262232 days202
Zone 2
April 2011$186242 days97
April 2012$197631 days84
Zone 3
April 2011$130052 days20
April 2012$141354 days24

As always, stats reflect pricing and activity for 2 bedroom, 2 bathroom apartments listed in ConnectMLS as with rented dates during the month of April. Analysis of specific areas is available upon request.

What is Rent Bacon?

Rent Bacon is a quick visual summary of what’s happening in the rental market this month compared with this time last year. It breaks the city down into three zones. For each zone, it takes the change in average rent rates and the change in average market times as percentages, and then averages the two percentages together.

Zone 1 covers central Chicago from South Loop through Lincoln Park. (Actual coordinates: 2000 South to 2000 North, from Western Ave to the Lake).

Zone 2 covers the near North side of Chicago, including Lakeview, Bucktown, Uptown, Lincoln Square, Roscoe Village and NorthCenter. (Actual coordinates: 2000 North to 5200 North, from Western Ave to the Lake.)

Zone 3 covers the Far North and Near South side of Chicago, including Edgewater, Andersonville, Rogers Park, West Ridge, Chinatown, Bridgeport and Douglas. (Actual coordinates: 5200-7600 North plus 2000-4500 South, from Western Ave to the Lake.)

Want more Bacon? Here’s last month’s update.