A recent edition of the Home Purchase Sentiment Index from Fannie Mae found that consumer confidence in housing is remarkably high, with more Americans agreeing that right now is a great time to buy or sell a home, compared to the same period last year.
Studies like this one are not unique. Throughout the years, there has been plenty of research done on housing, and many of these reports have served to reinforce the long-held notion that owning real estate is one of the quickest and most effective ways to build wealth in the United States.
In fact? Did you know that in a recent poll from Gallup, 35% of Americans ranked real estate as the single best type of long-term investment, placing it higher than stocks, gold, and savings accounts? In this annual poll, Americans have actually ranked real estate as the top investment opportunity for a whopping six years running.
Of course, using real estate as an investment can come in many forms. In some ways, it could be argued that even owning a home is a type of long-term investment, as this purchase allows you to build equity that can then be used down the line. Really, simply purchasing land and sitting on it could be viewed as a way to build wealth through real estate.
More commonly, though, when people in Chicagoland talk about acquiring an investment property, they’re just as likely referring to a property that can be developed, or turned into a rental or short-term house share as a source of passive income.
If you have aspirations of becoming a Chicagoland landlord, or using your current home as a rental property, there are some important things to keep in mind. Here are three key legal considerations to remember as you weigh the potential of an investment property here in Chicagoland:
1.) Purchases, Contracts, and Title
If you’re purchasing an investment property, it’s important to keep in mind that all of the paperwork and documentation that go into a traditional real estate transaction will still apply – often, with new details to consider. For instance, it’s going to prove incredibly important to perform a title search on any prospective property, to ensure that you’ll be able to attain full legal ownership without any complications or strings attached. Similarly, discovering any easements or development restrictions on the property ahead of time can help you save time, energy, and money down the line. Just as importantly? Remember that when it comes to purchasing an investment property, the way you approach the transaction and complete your paperwork can have long-term ramifications for your financial future, and the success of your project. For instance? Repeat property developers or investors may be able to tax advantage of a mechanism known as 1031 exchange, in order to “swap” ownership of like-kind properties while gaining some protection from taxes.
2.) Federal, State, and Local Laws
If you’re going to be renting out some or all of a property, then it’s important to make sure you’re fully compliant with federal and local laws and regulations. This could mean many different things, depending on your specific circumstances. Broadly speaking, landlords must be in compliance with federal regulations like the Americans With Disabilities Act, and the Fair Housing Act. There are also many state, county, and city requirements and regulations to be aware of, governing everything from how you may collect and manage security deposits, habitability standards for rental properties, licensing for short-term home shares and vacation rentals, necessary disclosures to new renters, and so on. Working with an experienced local real estate attorney can help you get a handle on the rules and laws you need to know, and provide guidance if you run into any issues or confusion down the line.
3.) Tenants’ Rights and Responsibilities
Depending on where you live, it’s important to understand the laws governing tenants’ rights and responsibilities. Here in Chicago, these matters generally fall under the purview of the Residential Landlord and Tenant Ordinance (RLTO), a sweeping ordinance that dictates the responsibilities, duties, and requirements for both landlords and tenants when it comes to matters such as subletting, property maintenance, rights of access, and so on.
Want to Keep the Conversation Going?
Weighing the upsides, the downsides, and the legal considerations that go along with purchasing an investment property or becoming a Chicago landlord? Have any questions, or curious about your next steps? Want an experienced legal professional’s insight on real estate law in Chicagoland? Want to discuss an issue, or learn more about a specific scenario in more depth?
Whatever your Chicagoland real estate needs, don’t hesitate to get in touch with the attorneys and staff of the Gunderson Law Firm to keep the conversation going. Our team possesses unmatched professional expertise and insight, reinforced by years of experience and long-term connections throughout Chicago’s real estate, finance, title, and insurance industries. Our full range of real estate legal services includes:
- Residential Real Estate
- Commercial Real Estate
- Purchases and Sales
- 1031 Tax-Free Exchanges
- Mortgage Conveyancing & Advice
- Real Estate Litigation
- Title Insurance
- Title Examinations & Disputes
- Asset Protection / Trusts
- Estate Planning / Wills
- Reverse Mortgages
- Property Development
- Condominium Law
Have any questions? Don’t hesitate to get in touch whenever you’re ready to talk shop.