What areas in Chicago and Suburbs there is a demand for Midterm Rentals?

Question

Hello everyone I'm new to real estate and trying to learn as much as I can. Right now, I'm working on getting pre-approved to buy a property and want to make the best decision in terms of optionality (exit strategies). Right now, I have come to the conclusion from everything that I have consumed so far on the internet that STR and MTR strategies are the best in terms of ROI and producing cashflow. So I do want to eventually get involved with it, but because my credit isn't great and my starting capital isn't much (less than 10k), I can probably qualify to buy something under $200k, so I'm thinking about buying something for myself as FTHB to live in and then having the option to rent it out, ideally as a mix of STR and MTR, but I would be happy if I could just do the MTR. My questions are:

1. how can I check with the HOA that I have the option to rent it out as MTR or STR?

2. and in terms of location, how can I research which areas have demand and the gap?

John Warren · Answer

@Yanaki Bitsin you can check air dna for short term rentals. I am personally still a big fan of long term rentals due to how much more consistent and proven the model is. I would focus more on getting your credit in good shape and saving up some capital. Real estate is an incredible way to build wealth, but it is not a get rich quick scheme. Normally, you can have a better return on time initially by picking up a second job or a side hustle and paying down debt/saving up until you are in a good financial position.

Crystal Smith · Answer

Areas around hospitals have a demand for MTR. The target applicants are traveling nurses. This was especially true during the pandemic. It's died down a little but if you get hooked into the right organization it has high potential.

Bonnie Low · Answer

If you're looking to buy in a homeowner's association they all publish bylaws that will state what their rules and restrictions are. You can probably find them online. If you do go forward to buy within an HOA, take the time to go to a few of their meetings or at least read the minutes of their meeting to see if there's any discussion about STRs or MTRs. You want to know how they view them. Are they discussing them in a derogatory manner or are they clearly supportive? You wan to gauge the climate of the HOA. And that climate can change over time.

Jennie Berger · Answer

MTRs are my favorite investment strategy! Considering your starting capital, one thing you might also consider is rental arbitrage. I recommend narrowing down your preferred location(s) first based on your target demographic and what's practical for you to self manage. Then sort through less expensive rental listings online--1 bed 1 bath, studios, maybe 2 bed 1 bath. Then start reaching out to the owners / landlords / property managers with your plan. MAKE SURE YOU HAVE A STRONG PLAN that is honest, makes sense, and benefits EVERYONE involved. Keep in mind with MTRs you need money to get the place up and running, ie, to furnish. With rental arbitrage you'll also need enough funds for a first and last month's rent deposit. This is why I recommend starting with a smaller rental at a lower price point. If you choose a location near a major hospital that hires travel medical professionals, your smaller unit can be the perfect fit for their housing needs. This is a great way to get involved in MTRs with less risk and a lower barrier of entry. Good luck to you!Jennie BergerProperty People

Jennie Berger · Answer

My demographic is a mixture of travel medical professionals, relocating families, college / grad students, and business travelers. My properties are 3 beds 2 baths mainly and within 20 minutes of a major university and several major hospitals as well as 3 miles to Downtown. I invest currently in Chicago (where I live), Knoxville TN (where I lived for 10 years), and Jacksonville FL (where I see huge growth potential).

Victor So · Answer

Hey! 1) Your real estate agent should be able to find out that information for you by contacting the HOA manager. However, note that most condos on the north side of Chicago ban airbnbs. In addition, many condos require 1 year leases when renting out. You may have more luck in the suburbs but you need to check with the village. There are some suburban cities that allow Airbnb, some that don’t, and some who have no regulations around it. All in all, do your due diligence by looking up bylaws and checking with the city. 2) Airdna works. But you can also just go on Airbnb’s website or app and perform various searches to see what STRs and MTRs are going for. This process takes longer, but I find that it gives you a better impression of the location and market.

Jarell McGrew · Answer

@Jennie Berger With MTR's being your strategy of choice, you definitely seem like an expert. Out of curiosity, are there specific niche's you're targeting with the MTRs (travel nurses specifically)? Also, are you looking at properties mainly around hospitals, near the local airports, or do you have a general area you're looking for your MTR's to be? I live in LA but would like to build a OOS portfolio. As I'm originally from IL I'd like to try building it here. Thank you!

January Johnson · Answer

You can also network with insurance companies. Insured people with major claims often need to temporarily relocate while their homes are being remediated/ reconstructed. I did a lot of this business after Hurricane Michael in Panama City, Florida in 2018/19. They paid top dollar, too!