Chicago Apartment Finders has just completed a successful year of Landlord Seminars. We have been overwhelmed by not only the attendance at these events, but also by the positive feedback we have received from our landlords. I was personally blown away at the first event, which happened to coincide with a cold snowy evening, but to my amazement we had a full house of landlords. This was a clear sign that landlords need and want more information on how to enjoy being a property owner while avoiding some of the common pitfalls that challenge landlords in Chicago.

Just a few of the topics we covered this past year were; "Proper Security Deposit Handling", "Rent Collection Techniques", "Finding and Keeping Good Tenants in these Tough Economic Times" and the "Chicago Residential Landlord Tenant Ordinance Summary".

The positive feedback has been overwhelming or to quote one of our landlords:

I learn something new at each seminar that helps me run my properties. The seminars have also changed my view point and options about the choices I have regarding running the properties. Even the seminars I haven't attended tells me about the ever changing landscape of property management and what others are questioning, problems others are facing, what situations I should keep an eye out for and new ways of making money. I look at the people who lead these seminars and your staff as additional resources for my needs. Keep it up. I'm looking forward to future seminars. Thanks.

When we resume our seminar schedule in the fall, we plan to present on the following topics; "Keeping Up with Changes in the Law and the Way it is Applied.", "Landlord Do's and Don'ts", "Effective Tenant Screening", and "Marketing Your Rental Property".

We are thrilled that so many of you have taken advantage of these events and our commitment is to continue presenting relevant topics that will help you become more informed and versed in the nuisances of property ownership and management.

I strongly encourage you to join us for one of our seminars in the fall.

It has been a long winter and many landlords have told us that they have been struggling with challenging, higher-than-digestible vacancy rates. At the same time they have been forced to drastically reduce pricing on the vast majority of their units. Not much fun at all. We know this has been a rough period for the landlord community, but thankfully I believe we have reason to be optimistic in the short term, and in the long term.

In the short term, things seem to be getting better fairly quickly. In the first two months of this year, we have seen more renters enter the market than we anticipated. It seems people are finding jobs again and getting back into the swing of looking for apartments. In each of the last four months, we have seen our number of rentals increase by better than 10% over the previous year. This is a very positive sign and one that we have not seen for over two years.

Equally encouraging is our web traffic, which has soared during the first two months of 2010. This is typically an indication that people are putting their feelers out there looking for new housing. So what, if anything will these positive sign mean for landlords in the short term?

It should translate to renting your properties faster. Rather than watching your unit sit on the market for 60-90+ days, it should spend less time waiting for a renter and shift back into the 30-60 period and possibly within 30 days.

In the long term, we are very positive on the rental market, mainly for landlords. As soon as the job market corrects, people will come back in the market looking for new housing, but they will be doing so as renters and for the foreseeable future. With the inevitable rise in interest rates coupled with far more stringent guidelines to qualify for a mortgage, people will be forced to turn to renting. In the same way that buying a condominium was fashionable and encouraged over the past decade, renting will now be in vogue for the decade ahead of us. This will create an excellent time to be a Chicago landlord, so hang in there.

Security deposits have traditionally represented a safety net for landlords but in what is becoming an ever-more-litigious environment for landlords, this idea is being challenged.

Unique to Chicago only, there is a body of legislation called the CRLTO (Chicago Residential Landlord Tenant Ordinance). This should be a document that protects both renters and landlords, but it is anything but equal in its interpretation. The CRLTO is replete with rules and regulations that most landlords or property managers don't know about but must follow, the most stringent of which is about security deposits.

For example, the CRLTO 5-12-080 states: "A landlord shall hold all security deposits received by him in a federally insured interest-bearing account in a bank, savings and loan association or other financial institution located in the State of Illinois. A security deposit and interest due thereon shall continue to be the property of the tenant making such deposit, shall not be co-mingled with the assets of the landlord, and shall not be subject to the claims of any creditor of the landlord's successor's in interest, including a foreclosing mortgagee or trustee in bankruptcy."

Any violation of these security deposit regulations will result in a penalty equal to two to three times the security deposit in addition to attorney fees. Just think about the landlord's that have collected a three-month security deposit! Worse yet, how about landlord's that have allowed tenants to prepay the years rent?

To make matters worse a small group of opportunistic lawyers use the CRLTO to gain money for themselves and their clients, regardless of the fact that no financial harm was done and that you, as a landlord, acted fair and in good faith.

So what can you do to protect yourself?

Start collecting a non-refundable move-in fee from your renters in lieu of a security deposit.

• This amount is typically $200-300 for a one or two-bedroom apartment and $400-500 for a three or four bedroom apartment. This "move-in fee" becomes revenue for you and then you avoid the liability of properly managing a security deposit. Even if there is damage to the unit, it is not easy to retain the whole deposit without the risk that your renter will contact one of these attorneys who may discover that you did not perfectly manage the security deposit. The good news is that most renters actually prefer to pay the move in fee rather than tying up a large amount of money for a year.

Be certain to return the security deposit to your tenants at the end of the lease.

• In the event there is damage to the unit, above and beyond normal wear and tear, you may be entitled to keep a portion of the deposit, but only if you are CERTAIN that you have followed all of the regulations that are stated in the CRLTO.

If you in light of this information still won't forgo a security deposit we highly recommend that you familiarize yourself with the CRLTO. Please don't hesitate to contact us about specifics or better yet come to our next landlord seminar this Fall. Just call 773-572-2740 to sign up for our exclusive invitation email list.

Despite the bad economy there is good news. People are still renting apartments; the overall pool is just smaller. And with fewer renters in the sea, you need to be more skilled at capturing them. Chicago Apartment Finders has already rented out more than 3000 apartments this year and I want to share some tips with you to help you fill your investment property faster.

Great pictures attract renters

• In a market with a higher supply than demand it is crucial that your unit stands out. Great pictures will not only attract renters to your property on our website but also catch the attention of our leasing agents when they search through the thousands of listings in our database. That’s why I more than anything recommend that we get some very good pictures of your property. And if you want to go the extra yard, you should also provide us with a description of what makes your property unique, for example that it is close to the beach, has brand new hardwood floors, ample closet space or free parking. Remember this is no different than a personal ad; you have to strut your stuff.

Make your property accessible to show

• The second most important thing you can do is to make your unit accessible at virtually all hours. We have prospective renters that view apartments up until 10 p.m. We find that when renting an apartment, more often than not, people do not have much time and therefore are likely to rent one of the first places they see. Would they have rented your unit if they had been able to get into it? The answer is maybe, but these are the opportunities, which need to be captured. I therefore strongly encourage you to entrust us with a set of keys so we can gain immediate access to your property.

Price your property in alignment with the market

• We often hear that landlords cannot take less than a certain rent amount or they are losing money. I strongly discourage this outlook. It is far better to collect something than nothing, even if that something is only 85-95% of your target. Nothing costs more than an empty unit. Renters are aggressively negotiating rents, because they know it is a “renters market”. My advice is to not resist this trend and to ride out the storm. Whatever money is lost during this economic downturn, will be quickly recouped as soon as the market rebounds at which point you will be in a commanding position.

Make your property presentable for showings

• This is simple, but often overlooked or forgotten. Nothing turns a renter off more than a dirty kitchen or bathroom or an entrance area that is cluttered with old newspapers and mail.

Think about collecting move in fee’s rather than security deposits

• Given the recent number of law suits surrounding the Chicago Residential Landlord Tennant Ordinance (CRLTO) and improper management of security deposits, there has been a significant trend of property owners that have phased out security deposits and in lieu are taking a non-refundable move in fee. I strongly recommend this course of action. It will help you to avoid a lawsuit, many of which are above $10,000 in fees and penalties, and you will also receive additional revenue with the “move in fee”.

There are fundamental reasons why your apartment may not be renting as quickly this year as it may have in previous years. The first of which is the job market, which is no secret, but its effects have been hard felt. National studies have now revealed that only 1 out of 5 graduating seniors have received a job offer thus far in 2009. This time last year, that number was better than half. This dynamic change has drastically reduced the number of new “renters” looking for an apartment.

The sour job market has also made people more apprehensive about moving in general. There is that underlying feeling, “will I even have my job next month or will there be more lay-offs?” In fact, another national survey reflected that 25% less people are moving this year than last year. This again is eating into our pool of renters.

Overall, people are being far more conscientious about how they spend their money. The truth is that it is expensive to move and people are taking this into account. Yes, there is movement in the market due to people downsizing, but a large portion of these people are moving in with friends or back home to save money. Once the job market returns, these people will be back in the market looking for new apartments. We are also seeing that corporate relocation, as you may well have imagined, has slowed significantly. We are no longer seeing professionals renting an additional apartment in a market where they commute.

The Future is Bright

The job market will eventually rebound and things will get back to business as usual. When this happens newly employed individuals will rush to rent apartments. It is unlikely these people will seek purchasing condos given new mortgage requirements and the likelihood that rates will have risen substantially, enough so to discourage buying. I am optimistic that renting apartments will be the trend for the foreseeable future; much like buying has been over the past ten years. The rental market is in a small storm, but the future is extremely bright. Once the job market returns, so will the renters.