Successfully investing in Chicago rental property means earning consistent cash flow through rental income and building wealth for the future. There’s a lot of money to be made in the Chicago real estate market, especially with rental units. In 2017 approximately 35% of Chicago’s 2.7 million population lived in rental units.
However, there are also expenses that need to be planned for when you decide to invest.
There is more to apartment management than just collecting rent. If you’re managing on your own, you need a budget for how you’re going to pay for both routine repairs and emergency maintenance. If you’re working with a Chicago property manager, you’ll need to be sure they’re getting good quotes for work that you need to be done. This will come down to whether they have relationships with the best vendors and contractors in the local area.
Figure out how you’re going to pay for the necessary maintenance and repairs. Unplanned expenses are only going to hurt your cash flow.
Chicago Rental Property Maintenance Budget
General industry standards say that you should save between one and three percent of your property’s value for maintenance costs. Every investor knows that those expenses will vary from year to year, and what you spend will often depend on the age and the condition of your investment.
Setting aside a reserve is a good idea because if you don’t use all of what you save in one year, you can just roll it over to the next year. This will allow you to continue building a larger reserve for any surprise expenses or major repairs. When a roof needs to be replaced, you’ll have enough saved to pay for it. This will keep you financially prepared.
Routine Inspections Help with Budgeting
Many Chicago and suburban rental properties will be required to undergo an annual inspection from the municipality or Housing Authority. These inspections will help you look for deferred and unreported maintenance issues that need attention.
Inspections will also tell you what types of large ticket items may be on the horizon. You’ll know when to expect roof repairs, HVAC system replacement, and new appliances. Routine inspections allow you to budget, and they also protect the condition of your investment.
Preventative Maintenance Must be a Priority
Emergency maintenance issues will always inspire a sense of urgency. When you get a phone call that the water heater is leaking or a tree has fallen through a fence, you take care of the problem right away.
Give the same attention and responsiveness to routine maintenance. Put together a preventative maintenance plan so you can keep everything in good shape. When you’re attentive to small things, you can prevent large disasters and unexpected costs.
Seasonal maintenance is especially important in Chicago. We get extreme temperatures, and you don’t want your pipes freezing or your outside water spigot bursting. At a minimum make certain hoses are disconnected and the furnace has been cleaned and inspected.
Provide a 24-Hour Maintenance Response
At MF Cashflow, we provide a 24/7 maintenance hotline. Your tenants may need to call at 2:00 in the morning, and if you’re managing on your own, you’re going to wonder why those emergencies always come in during the middle of the night. When you work with us, the calls come here. We take the calls so you don’t have to.
If a tenant has water coming in through the basement or the sewer is backed up, they’re going to want to get in touch with someone right away. This is vitally important. When a tenant calls, someone has to pick up. They want to be heard and listened to. Our team knows how to take these calls and we get the right person there quickly to fix the problem. This leads to your tenants staying longer. Resolving maintenance problems retains tenants. Make it part of your maintenance plan.
When you want some professional help with maintenance planning and budgeting, MF Cashflow can help. We've been named one of the top 10 rental management companies in Chicago and the Chicago suburbs. MF Cashflow is a full-service property management company. We’re here to help you earn more cash flow on your Chicago investment properties.