If you’re interested in a way to gain a little passive income in the Windy City, look no farther than the lucrative market of short-term rentals! Platforms like Airbnb and Vrbo can let you transform your Chicago property into a profitable rental that appeals to tourists, business travelers, and really anyone just looking for a comfortable place to stay. In this article, I’ll explore the ins and outs of running a short-term rental property in Chicago, from insider tips to ways to avoid potential challenges. I’ve run an Airbnb for the past several years, so I can give you all the insider information you won’t get just anywhere. Let’s dive in to this booming industry and unleash the potential of short-term rentals!
WHY CHICAGO IS GREAT FOR SHORT–TERM RENTALS
Chicago is really the perfect city to start a short-term rental. With its diverse neighborhoods, delicious food, rich history and strong economy, it’s a prime destination for travelers from around the world. And, thanks to the increasing popularity of vacation rental platforms like Airbnb and Vrbo, it’s become increasingly easier to turn your property into passive income.
Chicago’s thriving tourism industry is one of the best reasons to start a short-term rental. There’s never a shortage of visitors looking for a place to stay, and there’s always a good amount of business travelers attending conferences downtown that need temporary housing. Chicago is also home to many world-renowned universities and medical centers that are always bringing in academics, students and medical professionals who tend to prefer short-term rentals over traditional hotels.
Another reason why Chicago is so perfect is its dynamic and varied neighborhoods. Each area of the city has its unique charm, whether it’s the thriving arts scene in Pilsen, the Loop’s stunning architecture, or Lincoln Park’s cozy cafes. By capitalizing on your rental property’s specific location, you can attract a specific type of traveler and stand out in a crowded market.
GETTING STARTED: LEGALITIES
Before plunging into the world of short-term rentals, it’s important to understand the legal requirements, especially in Chicago. The city is generally pretty welcoming to vacation rental properties like Airbnb and Vrbo, but there are some specific regulations all hosts must comply with.
First and foremost, obtaining a business license from the City of Chicago is absolutely essential before you start investing in a short-term rental property. It makes sure you’re working completely legally, and it helps safeguard your investment in the long run.
It’s also crucial to understand Chicago’s strict regulations in some areas on the number of units that can be short-term rental properties. In most areas, only two units per building may be rented out as short-term rentals, while other areas prohibit them entirely. Make sure you keep up to date with any changes to the city regulations on short term rentals. For instance, the City passed new regulations in 2020 that require hosts to provide guests emergency contact information, maintain specific insurance coverage, and register with the city.
After obtaining the necessary licenses and permits, you can start earning passive income with your short-term rental. I suggest using a popular platform, such as Airbnb and Vrbo, as they provide an easy, convenient way to reach potential guests and manage your rental property. With the right strategies, you can form a lucrative source of income with your short-term rental property while also providing visitors with a unique, memorable experience in the Windy City.
STANDING OUT
If you’re looking to turn your property into a lucrative source of passive income with a short-term rental, you need to make it stand out from the competition. Here are some tips I’ve found on how to make your property more appealing to potential guests:
1. Invest in professional photos: Photos are the most important part of a short-term rental listing, and they’re the key to catching the eye of potential guests. Look into hiring a professional photographer that specializes in real estate, since they’ll know how to showcase your property in the best possible light.
2. Offer unique amenities: Consider adding special amenities to your property that other similar short-term rentals likely won’t offer. It can as simple as a complimentary welcome basket with local snacks and beverages, or maybe you provide complimentary bikes that guests can use to explore the city. Try to advertise it in the listing so it can do its job to attract more guests. I also like to have one extra thing I don’t mention that people love, and they often comment about it in the reviews.
3. Personalize the space: A great way to set your rental apart from others in the area is by giving it a personal touch. Try adding artwork or decor to reflect the unique character of the neighborhood — anything that tells a story is guaranteed to be more interesting and appealing than generic, bland interior design. I’ll touch more on this topic later on in this article.
4. Be responsive and attentive: Always be readily available to answer any questions your guests have, before, during, and after their stay. Offering exceptional customer service can really go a long way in making a memorable experience that encourages guests to leave positive reviews and recommend your property to others.
PRICING: MAXIMIZE PROFITS BUT REMAIN COMPETITIVE
When setting your rental price, you always want to maximize your profits while still being competitive with other properties in the area. Here are some key factors to consider when determining your rental price:
1. Location: While most thinking on short-term rentals focuses on tourism, in a city like Chicago, a great number of your tenants will be people that want to stay in a neighborhood. Nearly all of my guests that stay in my airbnb are parents and grandparents looking to stay near their children who don’t have room for them to stay in the house. You do NOT need to be in a tourist area or event to find guests – you just need to have a great space.
2. Time of year: Chicago experiences all four seasons, which can highly influence the demand for short-term rentals. Summer months tend to be peak tourist season, which can let you raise rental rates.
3. Amenities: A good price depends on amenities offered. Does your short-term rental property have a pool, rooftop deck, or a beautiful backyard to drink their morning coffee? If so, you can often up the price.
4. Market research: It’s always a great idea to do some research into the market before jumping in. Seeing what other similar properties in the area are charging can help you find the perfect price that’s competitive while still being profitable for you. It’s best to begin with the lowest price in the area until you get several good reviews. As your reviews start coming in, you can increase your price.
Once you’ve considered these factors, you can set a starting price. Keep in mind that it’s completely normal to continually adjust your pricing, especially if you’re not seeing as much demand as you’d like. You might need to lower your rates sometimes to stay competitive and attract more guests; other times, you might be able to raise your rates and maximize profits, if you’re seeing a lot of interest in your rental. Remember to always stay flexible while keeping an eye on the market to ensure that you’re offering a fair price while still profiting.
BUILDING YOUR TEAM
As the owner of a short-term rental property in Chicago, I can attest to the importance of building a team to ensure a smooth, successful operation. In my opinion, the two most important roles to fill are reliable cleaners and maintenance professionals.
For cleaners, look for individuals or cleaning companies that have a track record of excellence. I also recommend making sure they have a system in place for cleaning thoroughly between guests, including sanitizing all surfaces and linens.
For maintenance professionals, make sure they can address any issues that may arise during a guest’s stay quickly and effectively. I always prefer knowing that I have a go-to person or team that will resolve any problems without my getting involved, and it truly makes all the difference in guests’ experiences.
To actually start finding the right team members, a great strategy is going to other short-term rental owners in your area for their recommendations. They’re usually your best bet for finding reliable workers. You can also post job listings online, using platforms like Craigslist and LinkedIn, to find a larger amount of candidates.
Once you’ve built a team, it’s crucial to set clear expectations and communicate effectively with your team members. Expectations for response times and guidelines on cleaning and maintenance tasks will only work if your teammates know what they are.
Having a great team of reliable cleaners and maintenance professionals is one of the most important steps to ensure that your short-term rental property runs smoothly and provides your guests with the perfect experience.
CONNECTING WITH GUESTS
Getting your short-term rental up and running is only half of the story — you also have to make a memorable experience for your guests. This will not only ensure they have a fantastic stay, but also make them more likely to leave a positive review and even recommend your property to others.
One of my favorite ways to connect with guests is providing personalized recommendations for local things to see and do. Spend time finding the best restaurants, shops and attractions nearby, and compile a list of your favorites. To go the extra mile for your guests, create a guidebook or brochure that they can refer to during their stay.
Another tip for connecting with guests is to remember the little things that can make guests feel welcome and valued. Leaving a simple welcome basket or investing in high-quality toiletries and linens really go a long way in making guests feel special. I also love to add a personal touch, like a handwritten note welcoming them to the property. My personal favorite option is to have cloth bags with great designs in the unit that they can borrow when shopping.
Finally, always be available to your guests, and always be responsive to their needs. Encourage them to contact you with any questions or concerns, and make sure you respond promptly. Having an elevated level of customer service will leave a big impression, making guests satisfied with their experience. They will rarely reach out, but when they do, they will expect a quick answer.
FOCUS ON THE NEIGHBORHOOD, NOT THE CITY
One of my favorite parts of running a short-term rental in Chicago is the opportunity to get immersed in the unique character of Chicago’s neighborhoods. Each area in Chicago has its own distinct flavor and appeal, from Lincoln Park’s historic charm to Wicker Park’s trendy nightlife. It’s one of the biggest reasons guests choose short-term rentals over traditional hotels: they get the chance to explore the city like a local, shopping at local boutiques and dining at mom-and-pop restaurants.
From a business standpoint, focusing on the neighborhood helps you stay unique and stand out from the crowd. By highlighting the unique experience of your property’s specific neighborhood, you’ll effortlessly stand above the more generic options, attracting guests who are looking for a specific vibe.
Furthermore, focusing on the neighborhood, helps you build strong relationships with your neighbors. Being a responsible, respectful host shows the community that you’re invested in the area and want to make a positive contribution. I’ve found this can lead to referrals, positive reviews, and a better reputation as a host.
Ultimately, focusing your short-term rental on your neighborhood is a win-win situation for you and your guests. You get to tap into and get involved with the unique character and charm of the neighborhood, and your guests get an authentic, memorable experience.