I met yesterday with two of my favorite clients. They recently closed on and moved into a new home. They were fortunate that they were not required to sell their current condo in order to qualify to purchase their new house.
The problem? After many months on the market, their home has not sold. They came to me looking for advice about the possibility of renting out their condo. They were smart to ask.
First time landlords have a lot to learn, especially if they own Chicago property. There are a myriad of laws to navigate (Chicago Residential Landlord Tenant Ordinance, Illinois shared utility laws, federal lead paint regulations, federal fair housing laws, just to name a few).
A proper lease, with all required disclosures, must be used. There are many forms that purport to be "standard" forms that are either insufficient or detrimental to the landlord.
The lease term must be considered. Is a year lease a good idea? Maybe month to month should be considered if a property will remain listed, as any buyer will have to take subject to any existing lease.
Tenant screening is of vital importance. New landlords may be "tricked" by professional tenants. Making a bad choice of tenant is the worst problem a landlord can create and the best lease in the world will not make the eviction process faster. New landlords need to learn the ins and outs of credit reports and reference checking.
Financial terms such as how much, if any, security deposit to take must be considered. Also, procedures for dealing with deposits must be established in advance of offering a lease or accepting a deposit.
An understanding of the laws and procedures of renting needs to be explored by prudent property owners considering taking their property off the market in favor of becoming a landlord. Before undertaking such a plan, a few hours if advice and drafting from a landlord tenant attorney can save thousands of dollars in simple mistakes made by first time landlords.
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