Real estate investments come with a lot of moving parts. Keeping track of them all ensures your business runs smoothly, your documents are in order, the property is fixed in all the necessary ways, and that you’re generating income. One of your investment holdings may be a property that you are renting, either temporarily or as a business model. In either event, being a landlord adds an additional layer of complexity to your job. Running afoul of the rules involved should be avoided at all costs—but what exactly even are the rules?
When marketing and renting out Chicago investment properties, there is actually a specific ordinance you should be intimately knowledgeable of if you want to keep above board. Interactions with tenants can be loaded conversations that, if communicated improperly, might upset the renter-landlord relationship. Responding to tenants in a timely and appropriate manner as well as remaining attentive to all of your responsibilities comes with the territory. It’s also worth noting, too, that tenants have responsibilities on their end of the contract. Let’s take a look at some of the sticking points to be mindful of as you rent out your Chicago properties.
Repairs Come First and Foremost
One of the most crucial landlord responsibilities is repairs. The landlord is generally responsible for the working condition of the apartment’s equipment, from plumbing to kitchen units to heating—there are a number of vital areas you will need to keep track of. Information regarding the working order of the unit will come from your tenant. When something breaks, or its function diminishes, they will reach out to you. When they do, it’s important to reply promptly and follow up with completed work within 14 days of the original request. It’s not just being a good landlord, it’s the law.
If you fail to complete the required work within two weeks, your tenant can have it completed themselves and deduct it from rent. However, if the issue is something bigger, such as a dysfunctional water heater, or a broken heating system, they have the right to terminate the lease. As a landlord who relies on a tenant’s monthly rent, it is in your best interest to pay attention. Letting repairs or maintenance go by the wayside will only lead to more problems down the road. Sometimes, however, you may encounter issues that result from the tenant’s misuse of the unit—this is when their initial security deposit may come into play.
Security Deposits are Crucial
Security deposits are a great way of ensuring that your tenants are aware of their responsibilities for the well-being of the property. It gives them incentive to keep the quality of the unit at or near what it was when they moved in. If not, they’ll be responsible for the cost of any repairs, which you, as the landlord, can deduct from their security deposit. However, there are some things to keep in mind regarding security deposits:
- Timely deductions. If you’re going to deduct repair costs from a security deposit, you need to provide the tenant with an itemized list within 30 days of their move out date. Failure to do so means you lose out on deductions. Then, you also need to return the deposit (minus repair costs) within 45 days.
- Paying interest. You need to hold the security deposit in its own separate bank account, where it will procure nominal interest. It’s not much, but if you don’t pay, you’re liable to return twice the value of the security deposit, plus legal fees. Keep the money straight, or it will cost you.
- Transparency. What you do with the security deposit must be disclosed to the tenant. The information of the financial institution must be disclosed, and you must provide a receipt to the tenant for the amount of the security deposit, which includes a description of the rented unit. It may seem like a lot of rigamarole, but it keeps everyone on the same page and can help prevent issues down the line.
They’re somewhat tricky to navigate, but security deposits are really the best course of action. They hold both tenant and landlord accountable, and the language dictating their use is specific, so no one can take advantage.
Community Information Can Save You Time and Money
The legalese of Chicago’s landlord ordinance can spin your head, but if not followed to a T, you can land yourself in seriously hot water. It’s not something you have to be solely responsible for, however. There are myriad services aimed at making property owners more comfortable in renting situations. Being both an investor and a landlord is a lot, so you may consider finding a management company to outsource some of the stickier points of renting units can not only prove helpful but save you from legal trouble.
Whether or not you choose to enlist additional help managing your rental property, the HomeVestors® community has decades of experience in renting property out for a steady source of income. Joining them will gain you access to a network of individuals who can help lend their knowledge and expertise every step of the way. With a little help, you can keep renting stress-free and up to Chicago standards. If you are interested in starting your own real estate investment franchise, contact HomeVestors® today for more information.
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Photo by Brady Wahl, License
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