First Post / Introduction

[Quinn McLaughlin]

Hello,

My name is Quinn, and my brother Dillon and I have co-owned our single family home (4 bed/ 3 bath) for almost 3 years now. It was our first home purchase after moving out of our parents house. It is located in the NW suburbs of Chicago, IL - and we are looking to convert our house from our primary residence into a rental property. We are looking for some general guidance on the following items, and would greatly appreciate any input that you can provide. Thanks in advance!

Can anyone help detail the major steps required to transition our house into a "by the book" rental property?

So far we have identified the following:
- Need to contact the Village to obtain our Rental Permit (this includes an inspection, and some other village specific requirements).

- Need to contact our mortgage lender to verify if they allow us to rent under the current mortgage agreement (30 year conventional)

- Need to contact our home owners insurance company to inquire on switching insurance from a primary residence to a rental property insurance plan. We would plan on also getting competitive quotes outside of our current provider as well.

- Need to research and vet a proper attorney/ law firm that can assist us with the following items: 
- Assist us with understanding the pros and cons of spinning up an LLC and running the rental property under the LLC vs as co-owners
     - Assist us with creating an Operating Agreement for the property that details out all of our business objectives and plans including topics including but not limited to: What happens when we want to sell, what are the minimum financial commitments to the property, what happens if one of us gets married, what happens if one of us looses our job, etc...
     - Assist us with creating a rental application, as well as a rental lease document ensuring proper landlord protection from a legal standpoint

That is what we have put together so far. We are currently working on nailing down the physical projects at the house to ensure we will be good to go with our village interior/exterior inspection, and we are very excited about turning this into a true investment property which was our goal from the start. Our ideal plan would be to get a long-term tenant (1-2 years) to start with aspirations to switch to a VRBO/Airbnb situation later on down the road. We are about 1 block away from a potential new Chicago Bears NFL stadium and we believe that the demand for short term rentals will increase once that happens. 

Looking forward to connecting and hearing back from you all - thanks for taking your time to read through all of this! 

[Preston Dean]

Hey Quinn!

That is such an exciting transition & it sounds like you are on the right track! 

Regarding the mortgage & checking to see if they are going to allow you to rent it out. I am not sure that, that question is necessary if they continue to receive their payments on time.

Is it a requirement to have the property inspected before renting it out? If not, I wouldn't worry about it as yall have lived in it for a while. 

Regarding exit strategies I would just reassess those on a yearly basis, like you would a rental lease. IE 2024 is coming to a close you and your brothers/team sit down and lay out what you want 2025 to look like. If one person wants to sell and the others don't then maybe its time to buy out that 1 person. 

Regarding your proximity to DA BEARS stadium, I would keep it as a airbnb and just check with your city ordinance to make sure they allow STR.