- You must have a backup plan during the off season in case a tenant breaks their lease or you need to fill a unit for another reason
- You can offer short-term leases or long-term leases to get your property on the market during peak rental months
- In the city of Chicago, finding a renter is often not challenging, but you need to find the right one
Within Chicago’s real estate market it’s important to understand how to leverage seasonality in your favor.
In Chicago’s real estate market, it doesn’t matter whether your goal is leasing or sales, May through September is the peak season. This is when all real estate brokers and agents work round the clock trying to fit in as many showings as possible into a day to get leases signed or deals closed ASAP, before the snow begins to fall and everyone pulls on their winter coats.
Enter: the off-season.
When real estate is an investment, it must be a profit generator for its investor(s). During the off months, property managers must learn to leverage seasonality but understanding the local market in and out. Sounds simple right? Like so many things in life this is always easier said than done.
What if your investment property is in a college town—what are you going to do in the summer months when most students migrate back to their hometowns? What if a tenant breaks their lease early? What if your investment property has just completed renovations and you are interested in leasing it out during the slower season rather than let it sit over the winter?
These are a few of the obstacles that require a backup action plan as well as the knowledge of how to restructure a lease to ensure proper leveraging of seasonality.
Take the example of a lease ending in the middle of the off-season, like December in Chicago. Let’s explore some options, here, shall we?
First, you could create a shorter lease that will end at the beginning of peak season, for Chicago May or June. This will allow your property to benefit from the peak season rather than having the lease end within off-peak season if you were to do a 12-month lease. By creating a shorter lease for five months or so, will allow you to leverage seasonality in your favor.
From here, there are two possible outcomes:
- Your tenant can sign a 12-month lease in peak season and choose to stay in your property for another full year.
- You can start showing the property during peak season and find a new tenant to sign a 12-month lease, which ends the following year in peak season and the whole process starts over again.
The point is to leverage seasonality in your favor to have your apartment on the market during the peak of the real estate market season.
Ideally, however, it may be in the best interests of your client to create an extended lease—say, 16 to 18 months—that will not only secure a tenant for a longer period of time but allow for a much more desirable situation when it is time to re-sign or locate a new renter.
Now all you need to do is find a tenant to move in during off-season. In a market like Chicago this isn’t a great hurdle, as there is no shortage of new potential tenants moving in and out of the city or kids turning into adults, but it’s important to find the right one for your space. There are plenty of creative ways to help your property gain more exposure as the market slows down.
Andrew Nast is the founder and president of Lofty Real Estate Co.
