When Should I start Looking for a New Apartment to Rent? In Chicago

One of the questions I ALWAYS get asked, whether by friends or by clients, is “When should I seriously start looking for a new place to rent?” How many days before I need to move should I start shopping?

In Chicago the best time to start looking for a place to rent is roughly 60days out. Privately owned condos come on the market for rent at various times. If you’re looking for August 1st for instance you may see a privately owned condo his the market anywhere from June 1st or sooner or you may see them come on the market at the end of July. A great rule of thumb though is to start looking 60days out. Make sure when you are looking that you are only looking at units that fit your move in date. The rental market is extremely hot right now so owners have absolutely zero incentive to keep a place vacant for a tenant. For instance if a place is available for August 1st, owners will not hold it for September 1st.

With all this being said though it is never too early to start looking online! You can always look online and even have a Realtor send you listings in order to start to get an idea of what your money can buy you. This is extremely important in the current rental market as places rent fast (typically in a few days). Looking online for a while before actually shopping for a place will allow you to understand what a great deal is as soon as you see it and then you can jump on it!

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RENTAL MARKET IN CHICAGO IN THE FALL / WINTER!

There have been several articles written recently that have talked about rental prices “slipping” in Chicago. While year over year prices are up at near double digit percentages, the month to month has slightly….”slipped.” It amazes me how closely reporters follow the real estate market. They are so busy looking at the nuances of the market that they forget to monitor the overall trend of the market.

Recently I’ve run my own numbers on the state of the rental market, which will soon prompt me to write a blog with specific data which will address market price trends, market times, current inventory levels, etc. However, for now I just want to give my basic thoughts.

Traditionally the fall is always the start of the “slow season” for Realtors and Leasing Agents. October 1 marks the last big move day for Chicago until the Spring. We see less renters looking, but at the same time supply is decreased because less leases are coming due. However, psychology plays a roll in this market. This psychology says “I don’t want my place to sit vacant in the winter.” Ironically, these same people may not say that about summer, but the idea of a vacant home in the winter brings terrible thoughts to mind such as bursting pipes, snow removal, heating costs, etc. Therefore, landlords are typically more flexible on rent at this time of the year. It therefore only makes sense that month to month prices would slightly decline in this period. Just because prices have declined and occupancy levels have “slipped” by a sliver of a percent does not mean the rental market is in free fall.

Instead, what we need to do is compare year over year trends. For instance: it is expected for prices to decline from September compared to November. But, how much? We need to evaluate the decline from last year and compare it to the decline from this year. This could give us insight into how the market MAY be trending.

Journalists love to write articles with catchy headlines such as “Apartment Market Tumbles.” The average reader will read the article whether it is correct or not. I always read them, even if they are frequently inaccurate because I’m curious. When I, however, write a blog I do not have the luxury of being grossly inaccurate the majority of the time. I write blogs like this because I want to obtain clients, therefore I need to earn their trust. I do that by being as correct as possible and not just write a blog with a “I gotta read this” headline.

My next blog will evaluate the rental market properly. You’ll see the raw data from what I call a “leading indicator” in the rental market which are privately owned condos and homes. I will explain why I find these properties to be leading indicators of the rental market and where I think the rental market is going into the winter and into 2012.

 

Paul Blackburn is a licensed Realtor and Associate Broker with @ Properties. Paul specializes in leasing and sales of the Downtown, Near North and North Side neighborhoods of Chicago. Paul can be reached via e-mail at anytime of day: Paul@PKBlackburn.com

RENT PRICES CONTINUE TO INCREASE IN LAKEVIEW

If you read my blog a couple months ago you might remember that I said rent prices in Lakeview increased by over 15% from the same time period the previous year (March 1st to May 15th). Since some time has passed I decided to run numbers again and here is what I found out….

I used the Month of June to pull data. June 1st to June 30th. Here it is:

June 2010: 177 Units rented during this time with an average price of $1,672.06

June 2011: 216 Units rented during this time with an average price of $1,895.78

This is an increase of roughly 13.3%. Not as high as the 15%+ we saw a couple months ago but still very high. Typically we will see June rents higher than earlier months as we are starting to see less supply on the market and more renters in the market. From March 1st to May 15th of this year the average rent was $1,797.15.

With apartments being snatched up left and right what can you do to make sure you get the place you really want?

1 – Check your Credit! The first thing a landlord wants to know is how good your credit is. If you have bad credit, then you better start putting together a battle plan. Get a Co-Signer, save some money so you can pay a few months in advance to show good faith, etc.

2 – Have Paystubs / Proof of Employment in order! Most landlords will require that you provide proof of employment which can come in multiple forms but the most common are paystubs. Get these items in order before you apply for a place so as soon as you see a place you like you can jump on it!

3 – Be Willing to Move in ASAP! Right now Landlords have the luxury of not having to worry about their place being vacant. Which means if it is empty on July 1st they will more than likely not take a tenant any later than a July 15th move in. You may have to move in a couple weeks earlier than you truly need in order to secure the place.

4 – Be Up Front about Pets! If you have a Dog or a Cat know that this will limit your options. While many people may love dogs, they may not trust their owners and may not want them in their rental property. The best thing to do is to make sure you are up front about the type of pet that you have and explain it right away in the application process. Landlords do not like to be blind-sided and if they are, they will automatically start thinking the applicant is dishonest.

5 – Be able to turn over $$$ right away! Typically once a lease is signed First Months rent AND Security Deposit, along with any additional fees are turned over right away. Make sure you are in a position to do this. Unless checks are turned over the lease can be thrown away, so make sure you have the money ready to go so you don’t lose the place you love.

WATERVIEW TOWER – 111 W. Wacker Might be Apartments?

Photo by Stephen J. Serio - Crain's Chicago Business

All those who know downtown Chicago know the above building. The site that was once to be a 90 story luxury tower comprised of luxurious residents and the ever so sought after Shangri-la Hotel has been left only partially started. It has been an eyesore in the downtown landscape for more than 2 years. Several attempts to convert the building to a hotel and office space have failed and there is a new developer that is trying to step up to the plate to see if they can turn their plan for the building into Reality.

According to Crain’s Chicago Business, Related Midwest has signed a LOI (Letter of Intent) to enter into a joint venture agreement with the current owners of the property (the original developer’s creditors). Related has a plan for the 111 W. Wacker site that is now “all the rage.” Related would like to turn this site into apartments. The location is fantastic for such a building that it would appear to be a no brainer right? What is holding them back?

Two basic items: Financing and Construction. Converting any existing structure away from its original use can be very expensive. Related may look at the costs to convert this half started structure to apartments and simply walk away. Only research will tell. Secondly, financing can be a concern. While financing has opened up in the past 18 months, and especially so for apartment developers, it is still difficult to come by. Related, however, has an excellent track record and should have no problem obtaining financing. But, we have all heard that before.

What is shocking to me, are the amount of developers moving into apartments. Do you remember the boom times when every developer started building condos? Thousands were coming on-line…well we are seeing something similar here. Crain’s reports that three apartment buildings in the greater downtown area are currently under construction with another 11 in the planning stages. If all 14 projects are able to obtain financing and come to fruition, these buildings would mean that more than 5100 new apartments will hit the market. That is a relatively large number I think. I wonder if the current demand will be sustainable in order to absorb the massive influx of supply.

Since the beginning of 2009 more than 4000 units have alrady hit the market and demand has still outpaced supply. However, what is the tipping point and when will it tip? The big money doesn’t appear to see any end in site. 1 W. Superior place just sold for $320 Million, which equates to $396,000 per unit. The property was last sold in 2007 for $218 Million. Not a bad return in only 4 years huh?