Author Topic: Future legality of VRBOs for condos  (Read 3247 times)


  • 5 O'Clock Shadow
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Future legality of VRBOs for condos
« on: April 12, 2015, 04:26:24 PM »
Thinking of retiring in maybe 10 years and own my own home in downstate IL but love spending time in Chicago.  I'd like to get a small condo (studio or 1 bedrm) close to downtown/shopping/museums/lakefront that I could stay at when I like but rent out on weekends, likely mostly in the summer.  I figure I have all the time to spend in Chicago during the week and then stay in my downstate home on weekends or whenever folks might be in the condo for vacations.  I wouldn't be looking to make a profit, just to defray my own costs a bit on a second home.  But seems like things are getting rough with HOAs cracking down on short term rentals.  What do you all think?  What's on the horizon?


  • Magnum Stache
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Re: Future legality of VRBOs for condos
« Reply #1 on: April 12, 2015, 06:54:40 PM »
I think most HOAs will ban them. Short term rentals drive owner occupants nuts. Heck, many HOAs ban long-term rentals...

What you're proposing is *almost* certainly easier and cheaper to do by just renting a hotel room when you want to spend the night in town.



  • Stubble
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Re: Future legality of VRBOs for condos
« Reply #2 on: April 13, 2015, 10:53:41 AM »
I wouldn't worry about the "legality" of VRBO type rentals in the future. And when I say legality, I mean I think it's very unlikely that the Chicago City Council will pass an ordinance forbiding this type of short term rental, rather, I think it's far more likely that they will move to impose certain taxes on these rentals.

Your main concern seems to be with the HOAs. I don't think it is possible to generalize this answer -- each HOA will be different and I think you really need to focus on choosing a building that seems to be friendly with these types of rentals. When you're looking for condo's, your realtor shouldn't have any trouble identifying VRBO friendly buildings by requesting their HOA docs from the listing agent.

Once you're in, there is always a chance they could change the rules on you (although, you may have a chance to win an argument that you are grandfathered in and not subject to the rule change because you made a detrimental reliance to the existing rules). That may or may not be a winning strategy.

If it were me (and I've thought about making the same investment), I would buy in a VRBO friendly building, but only buy a unit that I know is profitable if I had to resort to a long term lease.


  • Bristles
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Re: Future legality of VRBOs for condos
« Reply #3 on: April 14, 2015, 08:59:53 PM »
My wife is an auditor for her vacation destination city's Transient Occupancy Tax and they're having problems with lack of affordable housing (read: straight rentals) because of VRBO et. al. 

She told me that the city government is discussing implementing hefty fines for operating a vacation rental in a "mother in law" type unit.  So yes, it is possible.


  • Stubble
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Re: Future legality of VRBOs for condos
« Reply #4 on: April 15, 2015, 08:30:46 AM »
For occasional use, have you done a spreadsheet comparing your owning-and-VRBO'ing out scenario to simply staying in a VRBO yourself?  Or cultivating friends in Chicago with a spare bedroom?  You can probably spend a lot of time in Chicago for a lot less money than buying a condo.


  • Stubble
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Re: Future legality of VRBOs for condos
« Reply #5 on: April 16, 2015, 12:38:31 PM »
There are two issues with short term rentals.

1) Your condo rules (Declaration, R&Rs, etc.) will most likely prohibit rentals of less than 30 days in order to qualify for HUD mortgage guarantees.

They will also have wording about "Transient and Hotel Services".  That wording is clearly defined by HUD and doesn't exclude you from VRBO type rentals - unless you offer daily cleaning & food, etc. Boards often misread this wording (happened to me recently).

BUT if there is no provision stating you can't have a "roommate" then you can call them a roommate as you are technically still living there (your furniture & stuff).

Find a good real estate lawyer that actually deals with associations and boards beforehand just in case an issue pops up.

2) You will need to pay local hotel taxes. Most states & cites have hotel type taxes on short term stays. Most apply to rentals of 30 days or less. The wheel on this is slowly moving but sooner or later they will crack down and squeeze you for money.

On the good side: VRBO and BnB are a good place to find renters - if you use them correctly. I have has 300+ renters and only one bad one (not really that bad). Check the prospects rental history. Ask questions. If they do not have a history then do a bit of Google background check on them. NEVER rent to any type of reunion. Old pals and gals getting together = disaster with no one willing to take responsibility.

I rent to professionals coming to town to work (even blue collar professionals). Families with young children are good. Generally, professionals who has enough money to travel & rent a place are a good bet. Being an actually homeowner is the best qualification.

Good luck. The sharing economy is growing at an incredible pace!


  • Stubble
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Re: Future legality of VRBOs for condos
« Reply #6 on: April 17, 2015, 09:14:33 AM »
One additional thought: by a condo, lease it to folks for below-rate figure *but* reserve the right to use a spare bedroom/couch/whatever makes sense when you are in Chicago.

I encourage you to run numbers for several scenarios (stay with friends/ stay in VRBO/ buy & vrbo out / buy & lease out) and think about the amount of day-to-day involvement you are willing to take on (not to mention legal/regulatory risk).

Do your homework, act accordingly & enjoy your visits to Chicago!


  • Stubble
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Re: Future legality of VRBOs for condos
« Reply #7 on: April 18, 2015, 10:55:49 AM »
Yea, we did something similar - not retired yet - but loved chicago so much we bought a small condo in the loop during the down turn. We loved it....BUT the HOA's kept going up, up, and up. Pretty soon we're paying the cost of a car payment and Chicago condos have strict rules about rentals and renters rights. We found through a local attorney that there are actually businesses that teach tenants in Chicago how to squat "rent free" if any of the 21 or so renters rights get violated - we were shocked. you can look this up on line. Net is that we tried to do what you are thinking, had a string of bad tenants - even in  a good building, turns out that there are flyers posted in the lobby on tenants rights. It's like a scam class that is really quite sad. Net is that we got out as long term, between HOA's and the renting mentality, it can be quite challenging. If you could somehow find a place that does not have the HOA's - Lincoln park perhaps? and could do some handy work yourself, be diligent about the renters you choose, you would have a shot. Property Managers are no help with this. They often do not execute the tenants rights process correctly which then leaves you wide open to be sued or not paid and once you get in a renter in Chicago, it can be nearly impossible to evict them. Do some research on line, call some attorneys in the area that specialize in this. I think I used Andrew Polanski who is well versed in this and really awesome. Good Luck.