Avondale, Chicago, IL - Airbnb?

Question

Thinking about renting out the two bedroom apartment that is going to be below our owners unit in Avondale. Are y’all having luck in this area with short term rentals? The kitchen isn’t super modern but is updated and functional. We put all new engineered hardwood floors, painted everything and updated the bathroom. Comps say I could rent this out for about $1400-$1500 a month. More updated units with laundry get closer to $1600. Wondering if we could achieve $1600 a month doing short term rentals instead of a placing a long term tenant. Any ideas for those that know this area? Thanks in advance!!!

Kevin Coleman · Answer

I think about Airbnb(especially a stand alone unit) as operating a hotel.  I have no desire to be a hotel operator,  that’s a job. I’m interested in investing.

Eric M. · Answer

Tried to do this on a building I am a partner on in Pilsen. (we were hiring a company to manage the STR's) At first glance, the numbers seemed great. We wanted to sell the building and thought the additional revenue would also increase the value of the property.

Ended up just a disaster. The shady management company dragged their feet. Took months to get the approval short term rental, spent thousands in furniture, the added expenses.

In the end, it cost us like 35K in costs and lost rent to get 3 units up and running. The rentals have been ok, but more seasonal than I expected. Buyers actually value the building LESS because of the uncertain nature of STR revenue. So we haven't been able to sell.  It will take almost 4 years just to make this money back which doesn't seem bad but it has been such a hassle. We don't know when they might change rules and regs and by then we will have to be buying some new furniture.

I wish we had never gone down this road, but your situation is different. Living in the building might make it easier...or it might be even more intrusive to have tenants knocking on your door to ask how to work the dishwasher, ask where the bean is, tell you the toilet is clogged, etc.etc.etc. and you are constantly worried about the cranky people leaving bad reviews, which definitely affect revenue.  My experience has been when you are renting a room in your house for some side cash, guests are very very understanding about small issues and inconveniences. They will give a good review just for your effort. But when they are renting a standalone unit that appears to be run as a profit making business, their attitude changes.  They are much more demanding and pickier and have much higher (sometimes unrealistic) expectations and are more willing to slam you in a review.

John Warren · Answer

@Michelle Bright for the small bump you are describing in rent I do not think this is worth your time. Also, Chicago has quite a few Air bnb properties at this point and unless you are in a fantastic location I don't think it is worth it. Avondale is a great place to own a rental, but I would personally pass on doing Air bnb if I were you. Spend all that time and brain power buying another property instead.

John Underwood · Answer

Have you checked to see if it is legal, do you need special registration or permissions from the city?

Nathan Gesner · Answer

Michelle, I harp on this all the time. There is a chance you could make more money with a short-term rental but it takes work and savvy and is not as easy as most people make it sound.

Short-term rentals rent for a higher rate, but they come with far more expenses:

• Lodging tax
• Sales tax
• Utilities
• TV and Internet
• Consumables (soap, shampoo, TP)
• Furnishings
• Marketing costs
• Transaction fees
• City/County/State registration

That's just a quick list off the top of my head. You also have to consider the amount of time it will take you. If you have free time, it can be a fun little side hustle. You can make more money by doing the cleaning yourself (paid for by the guests). But you have to consider whether you have the time available and whether your time could be better spent on something else (primary job, family, finding new deals, etc)

Another BP member posted today that he was crushing it with his first AirBnB. When I added the additional expenses that he failed to account for, I showed that he's probably not making any more than he would with a long-term rental.

Again, you have to consider all the expenses. You can figure out what your rental would bring in by researching your market on AirBnB, Homeaway, VRBO, FlipKey, or other sites. Find comparable homes in your market to see what they rent for, what amenities they provide, how often they're booked, etc. You should be able to study the market for less than a week and have a pretty good idea. Just remember it can take 3-12 months to build up clientele and good reviews before you really start to get busy.

Paul Sandhu · Answer

Besides the cosmetics convention, what else brings tourism to Avondale?