Renting out a Luxury Condo
Hello Friends! This is not the type of post I envisioned I would be writing on this website but c'est la vie. We have spent a good number of hours over the past 3 weeks getting our beautiful luxury condo in West Loop, Chicago ready to be transformed into a rental unit. Most people would use a professional to do this. We chose the harder path of doing it ourselves for a multitude of reasons. But in the end, I’m glad we did because we learned so much from the experience. I’m not going to go over every single line item here (if you care that much, just ask me directly) but I will touch on a few broad strokes.
Know your target demographic.
Reach your target demographic.
Be patient.
West Loop, Chicago is an interesting neighborhood, as it’s a classic case of what I would consider “gentrification on steroids”. Originally a meat-packing district, it’s now quickly become a world destination for restaurants (e.g. Ever, Oriole, Girl & the Goat, Next, The Publican, Au Cheval, Time Out Market). It is home to a lot of newly developed corporate headquarters (e.g. McDonald’s, Google [Midwest]). And with that comes a range of swanky hotels (e.g. Nobu, The Hoxton, Ace Hotel, Soho House). With its proximity to The Loop (Chicago’s traditional business district) and so many desirable establishments, a lot of young and not-so-young professionals consider West Loop to be the “Place Where It Happens” and just HAVE to live here.
Who is our Target Demographic?
So, who would want to rent a Spacious Luxury 2 Bedroom, 2 Bathroom, 2 BALCONY condo in this trendy neighborhood? My guess: someone looking for more space; maybe they want a dedicated room for an office or more outdoor space. It could be a young couple who have been struggling to work from home in a cramped space. Or it could be an older person who may need to go into the office in the area. But whoever they are, they would really want to live and breathe in West Loop because you can easily lower your monthly rent by a third or more if you just moved a mile or two away.
That demographic is relatively affluent and thus has a lot of options. They usually have the option to purchase a property/unit. Anecdotally, we have heard a lot of our friends in the Chicagoland area are trying to buy. And the charts support that.
Source: MRED
As you can see, for the past 2 months there has been a significant increase of properties going under contract YoY. We have also heard anecdotes that a lot of contracts end up falling through (e.g. failed home inspection). Again, the charts support this.
Source: MRED
Even with the pent up demand due to severely reduced showings during the COVID March and April months, we are not seeing significant closings, compared to 2019. What’s going on? That’s an exercise left to the reader.
So back to the RENTAL market — My perspective is that we lose some potential tenants to the BUYING market but also gain some from current tenants that either don’t want to buy (or aren’t ready yet) but do want to upsize from their 1 Bedroom or small 2 Bedroom. Which way does the scale tilt towards? It’s too early to tell.
Reaching the Target Demographic
How do we reach these particular potential tenants then? The easy answer would be through the MLS/Agent/Broker network. In Chicagoland, the landlord ends up paying a commission to agents who bring in a tenant. This has worked very well for us in the past when we first moved to Chicago (Thanks for being so wonderful to us, Anthony!). But now that we’re on the other side of the transaction, we’re less thrilled about paying roughly a month’s worth of rent for a service that we can mostly do ourselves (sadly we cannot perform the MLS listing, which hurts a lot).
So now that MLS is out of the picture, what do we do? We ended up listing on: Zillow, Facebook, Domu, Apartments.com, Craigslist, and random places like TurboTenant and Nextdoor. How did each platform pan out? I’m glad you asked. I’ll be hosting a workshop on this very topic on Tuesday September 15. Register for the event at Luma. It’ll be over Zoom so you will be able to actively participate in the discussion.
We’re 3 weeks into our marketing campaign and have had a healthy amount of interest and showings. But most potential tenants are still evaluating their options because there are just so many options in West Loop. There are many brand new high-rise apartment buildings that have opened up in the last year and they all boast amazing amenities and offer some very enticing incentives (1-2 months free rent is commonplace).
Patience
The tenant we envision will crave a quieter, more private, and relaxed home and community. They care less for the shared amenities and more for small gatherings in a private home, which I argue is advantageous during a pandemic. But finding this type of person takes time. And we’re willing to wait for the right one. If that happens to be you, check out our website or follow us on Instagram (@606aHome).
