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City on the Rebound: 5 Key Reasons to Invest in Chicago Short-term Rentals Now

Chicago was the first large US city to fully reopen last June. After sustaining a brutal blow from Covid-19 in 2020, its tourism and hospitality industries are quickly bouncing back. Airbnb said the city was its second most-booked destination last fall, based on bookings between January and July 2021. If you’re thinking of ways to make good passive income, then investing in Chicago short-term rentals may be a smart move.

Why Chicago is Great for Short-term Rentals

Voted by Timeout.com as the second most beautiful city in the world (after Prague), Chicago will never run out of visitors. People are always going there for its world-class art, architecture, music, sports, and entertainment. Its food scene is phenomenal, and the variety of cuisine is global.

Since Lake Michigan is only walking distance from the downtown neighborhoods, people are happy to find a beach right next to the skyscrapers. Something many large cities don’t offer.

But people gravitate towards Chicago not just to eat, hang out, tour, or attend live events. That city is also a top world financial center and a global hub for industry, manufacturing, telecommunications, and transportation.

For several decades now, Chicago has also established its cultural, education, and health services sectors.

Since ‘The Windy City’ has something to offer for just about everyone, many visitors who go to work or study there eventually opt to settle for good.

What exactly is its draw and why is it a good place to invest in Chicago short-term rentals?

1. Tourism is back.

For many years now, Chicago has been the 3rd most visited city in the USA after New York and Orlando. The city set a new record when it received 120 million visitors in 2019. Cook County, where the city belongs, is very warm and welcoming to visitors. It absolutely thrives on the travel and hospitality industries.

As we know, Covid-19 upended tourism in 2020 — particularly air travel. But when tourists regained confidence to fly again last year, many of them chose to flock to Chicago. The city was the 3rd most popular destination for summer leisure flights in America in 2021.

Ever since social distancing rules were lifted last June and capacity limitations in restaurants, bars, gyms, and large venues were dropped, tourists have come in by the droves. The popular Navy Pier saw more than a million visitors in July alone.

Choose Chicago, the organization responsible for marketing the city as a tourism and meeting destination, says the city has already recaptured nearly 90% of the average room rate for a typical summer in the city.

Leisure and hospitality employment has also increased 45% from May 2020 to June 2021, with steady increases in the past 5 months.

2. Events are ongoing.

Chicago has a huge draw for conventions and trade shows. The city’s McCormick Place is the largest convention center in the nation and the 3rd largest in the world. It hosts the Chicago Auto Show every February, the International Home and Houseware Show in March, and the Restaurant Hotel-Motel Show each May.

Choose Chicago says 72 shows are already booked between August 2021 and December 2022, expected to attract an estimated 1.4 million attendees.

3. Chicago is an economic powerhouse.

Chicago is included in the top 10 richest cities of the world, according to CNBC, CEOWorld, and the World Population Review. These organizations base their ratings on a variety of factors including GDP and the number and wealth of ultra-rich residents in each location.

Additionally, this city boasts one of the world’s largest and most diversified economies. Its central business district, The Loop, is the 2nd largest commercial business district in North America and the world. It is home to the headquarters and regional offices of top global and national businesses, hotels, restaurants, theaters, retailers, and many of the city’s famous attractions.

Some 400 major corporate facilities are located here, 36 of which are in the Fortune 500, and 31 in the S&P 500.

For many years, Chicago has been named the nation’s top metro for corporate relocations and expansions.

4. It has a massive workforce.

Chicagoland, as the greater metro area is known, is home to 9.5 million people. About 2.7 million live downtown. It’s the 3rd most populous city in the US after New York and Los Angeles, and one of the 40 most urban areas in the world.

Though the city has seen some population decline in recent years, it still has the highest demographic of the 25-44 age range, considered to be the “prime worker” years.

Greater Chicago holds the 3rd largest labor pool in the country, with 4.63 million workers generating an annual gross regional product of over $698 billion.

It’s worth noting that Chicago’s minimum wage is one of the highest in the country. Companies with at least 21 employees are required to pay $15 per hour to non-tipped workers.

5. Livability is great.

In recent years, Chicago has earned a plethora of recognitions — “Best City in the World”, “Top City for Having Fun and Enjoying Life”, and “World’s Best City for Having it All”.

It was also deemed “2nd most fun city in the world” and “3rd friendliest”.

This year, it’s still in the top 12 of the “World’s Best Cities” based on factors like food and culture, affordability, friendliness, happiness, community projects, green spaces, and long-term sustainability.

Niche.com gave Chicago top marks for nightlife and diversity. It also rated the city “good for families” because of the outdoor activities, health and fitness, and ease of commute. The city has a comprehensive, top-notch public transportation system that makes the metro area very navigable.

And it’s not only the 6th most walkable big city in the country, it’s also very bikeable.

With over 600 parks, 70 nature and bird sanctuaries, and 18.5 miles of lakefront trail, no outdoor-lover will find it boring here. There are more than 40 cultural heritage museums, too, and over a hundred diverse neighborhoods to explore. There’s always something to do and places to see in this mecca of a metropolis!

Chicago Short-term Apartments

As you try to decide which particular demographic to appeal to, be mindful that corporate housing is in strong demand. Employees and executives are searching for Chicago short-term monthly rentals downtown — from affordable studio units to luxury-style suites.

There are also families from out of town coming for extended weekends and “work-ations”. With many people now working and studying remotely, it doesn’t really matter whether they’re back home in the country or spending a couple of weeks downtown.

Furthermore, there are travelers needing Chicago furnished short-term rentals that they can lease for weekly, month-to-month, 3-month, or 6-month stays. They may be in a “transition” where they’re considering moving to Chicago for good, but need some time to check out the neighborhoods.

If you have a place with a kitchen, WiFi, on-site parking, and a designated workspace, you’ll likely attract those types of on-the-move families and workers.

In fact, Airbnb encourages owners to offer special rates for long stays. They request hosts to accommodate single monthly payments without additional charges.

IMPORTANT STATS:

Airbnb occupancy rates: 46.62%
Average Airbnb cap rate: -1.13%
Average Airbnb rental income: $1,531
Median household income in Chicago: $55,295

Short-term Rentals Chicago Suburbs

But while many visitors prefer to stay in the center of town for quick access to amenities, others choose the suburbs for a quieter, less crowded experience.

Families with young children, seniors who want more privacy and a slower pace, individuals who like being closer to nature. If you want to cater to those markets, you can look at Chicago’s suburbs as an alternative to downtown properties.

As mentioned earlier, the metro has a reliable transport system — with 7 interstate highways and plenty of long-distance commuter trains and buses. That makes downtown Chicago just a short bus or train ride away.

Chicago Short-term Rental Ordinance

Chicago has strict rules on Airbnbs, though. Owners are required to register directly with the city government and pay the necessary taxes and fees for licenses and registrations.

If you plan to rent out single or multi-family homes of 2 to 4 units, and you don’t live in any of them, that won’t be allowed. But properties with 5 or more units are okay, as long as less than a quarter of them — or up to 6 units, whichever applies — are leased out.

In 2020, the city council also banned one-night stays.

Visit the city government’s website to know all the details on Chicago short-term rental rules.

Conclusion

It’s been reported that investors from out of town have started considering Chicago as an alternative to big cities like New York, Los Angeles, and Seattle. The Windy City offers more or less the same opportunities for jobs, entertainment, and coastal environment, but its Midwestern location makes it a lot more affordable for real estate investing.

If you can find a duplex or 3-unit building, which is common enough in Chicago, consider living in one of the flats so you can make good passive income at the same time.

We can help manage your rentals for you. Cohostit provides turnkey management services — from marketing to optimization to issue resolution — and everything in between. We’ll take the headaches and sweat of short-term renting away from you so you can worry less and earn more.

We’re also active in some of the hottest real estate markets in the country like Tampa and Phoenix. So you can take a look at those options, too.

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