airbnb chicago

The Ultimate Guide to Protect+Comply with Chicago's Airbnb Regulations

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Keeping your short term rental compliant in Chicago is not an easy task. If you dig deep into the City archives, you’ll find a 38-page Ordinance governing all short-term rentals. You can find the Ordinance HERE

Before you venture into this market and begin to invest your time and money, here is a run-down of the Ordinance so you are clean and compliant with the City:

Property Types

  • Single Family Homes: If you own a single family home, the City of Chicago asks that the dwelling unit be designated as the applicant’s primary residence.

  • 2-4 Unit Buildings: If you own a building containing two to four units, the City of Chicago asks that the building be designated as the applicant’s primary residence and no more than one unit in the building be used as a vacation rental.

  • 5+ Unit Buildings: If the dwelling unit is located in a building containing five or more unit dwellings an attestation that: in no more than six dwelling units in the building or one-quarter of the total dwelling units in the building. whichever is less. are or will be used as vacation rentals or shared housing units. in any combination

Registration and Insurance:

If this is your first Airbnb, than you only have to register through the Airbnb website. Airbnb automatically helps you register for your license

If you are interested in putting more than 1 unit on the short-term rental market, a Shared Unit Operator License is needed ($250 - Good for 2 years). In order to get a Shared Unit Operator License, you must go through the BACP web portal and go through their 6 step process.

Insurance

Homeowner's insurance + General commercial liability insurance no less than $1m = ~$500 / year. There are short-term rental insurance companies available, if needed.

Fire code

According to the Fire Code of Chicago, you may have no more than 1 person per 125 SF per dwelling unit.

Safety and Rules When Operating Your Shared Housing Unit

● Clean soap, linens, towels, dishes, and utensils must be provided

● Notification to police of illegal activity is required

● Contact name, license number, and evacuation diagram displaying means of egress must be displayed on all entrances/exits

When you register, what information is shared with the City?

1. The host’s name (this should be the primary resident, not a co-host or business);

2. The address of the unit being registered;

3. The contact information for the host or a local contact person, such as a co-host, including email address and phone number (if available);

4. Whether the unit being listed is a:

  • Single family home;

  • Unit in a multi-unit building; and

  • Whether the listing will make the entire dwelling unit available for rent or a room or portion of the dwelling unit available for rent.

5. Whether the unit being listed is the host’s primary residence. “Permanent occupancy” means occupancy on a daily or nightly basis, or any part thereof, for a period of 32 or more consecutive days. “Transient occupancy” means occupancy on a daily or nightly basis, or any part thereof, for a period of 31 or fewer consecutive days.

Shared Housing Units -Commissioner's Adjustments

(a) The commissioner is authorized to grant an adjustment to allow:

(1) the operation of a shared housing unit located in:

  • a single family home that is not the shared housing host's primary residence; or

  • (ii) a building containing two to four dwelling units, inclusive, where the dwelling unit is not the shared housing host's primary residence; or

  • (iii) in a building containing two to four dwelling units, inclusive, an increase in the number of dwelling units that may be used as shared housing units.

Such an adjustment may be approved only if, based on a review of relevant factors, the commissioner concludes that such an adjustment would eliminate an extraordinary burden on the applicant in light of unique or unusual circumstances and would not detrimentally impact the health, safety, or general welfare of surrounding property owners or the general public.

Factors which the commissioner may consider with regard to an application for a commissioner's adjustment include, by way of example and not limitation:

  1. the relevant geography

  2. the relevant population density

  3. the degree to which the sought adjustment varies from the prevailing limitations,

  4. the size of the relevant building and the number of units contemplated for the proposed use

  5. the legal nature and history of the applicant

  6. the measures the applicant proposes to implement to maintain quiet and security in conjunction with the use

  7. any extraordinary economic hardship to the applicant, due to special circumstances, that would result from a denial

  8. any police reports or other records of illegal activity or municipal code violations at the location

  9. whether the affected neighbors support or object to the proposed use.

(b) A person seeking an adjustment shall make a written submission to the commissioner, presenting all factors which the applicant believes to be relevant to whether an adjustment is appropriate. The applicant shall provide a copy of the written submission to the adjoining neighbors. The commissioner shall review the materials and make a written determination within 60 days, which shall set forth the factors used in arriving at the determination. During the 60-day review period, the commissioner shall notify the affected alderman and solicit a recommendation based on the alderman's analysis of relevant factors, and may seek additional information or supplementary proof from the applicant, and may also solicit information from the community.

If the commissioner denies the application for an adjustment, the applicant, within fourteen days of receiving the denial, may request a hearing from the commissioner. Upon receiving such a request, the commissioner shall schedule and conduct a hearing expeditiously. At the hearing the commissioner may receive written submissions witness testimony, argument and documents regarding the application. The commissioner shall, within thirty days of the conclusion of the hearing, render a decision, which shall constitute a final determination for purposes of judicial review.

May this serve as your outline when looking to invest your time and money into short-term rentals in Chicago. It does not pay to try to skirt the laws because penalties go from $1000-5000 per occurrence. Save yourself the headache and time, and consult with a local expert to make sure you are legal and compliant.

Chicago's Growing Airbnb Culture and Investment Market

Want to explore the little-known neighborhoods of Chicago? Own a home in one of Chicago's hidden-gem neighborhoods? There is a growing trend of short-term renters and travelers in Chicago. According to Airbnb, in 2016 there were 300,000 travelers in 2016. 500,000 in 2017. Wow. That is growth.

It is creating a new culture along with it, too. The lesser known neighborhoods, and their businesses, now benefit in unexpected ways.

The Overview: Airbnb In Chicago

Airbnb gives property owners with extra space to rent a platform to connect with travelers. Through the Airbnb platform, owners and investors in Chicago can list their property with images, amenities, and details for their ideal guests.

Chicago travelers look through the listings, and when a user finds the right place to rent, they can simply (and safely) book and pay.

The Airbnb platform makes it simple to rent out your garden unit or coach house or guest suite or any space that you only use occasionally.

Here are the Airbnb benefits for Chicago property owners include:

  • Surge pricing for events, Seasons, and weekends
  • Supplemental income
  • Potential to meet guests from across the world
  • A nice place to house family and friends coming into Chicago

Airbnb guests get a local Chicago experience instead of being limited to hotels. This seems to be highly appealing to Millennials, but we've seen all ages use Airbnb to save money (versus a hotel) and stay closer to family/friends. Others look for truly unique accommodations in a home-like atmosphere. Here are some of the benefits:

  • Airbnb's safe vetting and identification process
  • More options in more Chicago neighborhoods
  • The LOCAL Chicago neighborhood experience
  • Unique buildings
  • PRIVACY

Little-known Airbnb Gems in Chicago

Some Airbnb options fulfill your basic needs. You get a place to sleep, a kitchen, a bathroom — just the basics. Others go way beyond average with creative decorating themes, unique buildings and designer touches. While some people go for affordability, many want the experience of staying somewhere unique. The city has many of those standout options that solve the dilemma of where to stay in Chicago.

What are some of the top-notch Airbnbs in Chicago? Here are some unique offerings in the city:

Nestled in Southport Corridor, a short walk to Wrigleyfield, this duplex features two floors of newly renovated finishes. Equipped with 4 beds and room to sleep up to 10, you can find this home on a quiet one-way street only one block away from the Brown "L" stop.  Enjoy the fully-equipped kitchen and bathrooms before heading out to a Cubs game! You even get a personal parking spot in a gated area.

winchester chicago airbnb

Bucktown is one of the sought after neighborhoods for families and young professionals. It has some of the best food, coffee, and cocktail joints in the city.  This home is all custom-made. It even has heated floors in the basement!

From the outside, you see a quaint garden in the front and when you enter you can see that everything has been meticulously detailed. The architecture and detailing leave you in awe over this Bucktown home. The outdoor area is fully stocked with a grilling area, garden, sound system, and a nice little yard. This home is great for business traveling groups and families!

RIVER NORTH GALLERY on the Park w Parking

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The apartment is located in River North in Downtown, Chicago. It is in the Near North Side district, and as seen on the map below, in the River North area. There is a very prestigious high school (Walter Payton College Prep) closeby, town homes with young families and popular cafes and restaurants (Big and Little's) in the neighborhood.

It's the place to be! Formerly home to many factories, it's modern mix of high-rises and historical buildings adds to the neighborhood's eccentric feel. You can find some of the most popular restaurants, dive bars, lounges (nightclubs), jazz clubs and art galleries here. The area is ideal for a traveller. The apartment is near all major shopping and nightlife streets, while also being walking distance from Lake Michigan.

Airbnb Effect on Chicago Neighborhoods

Airbnb’s impact in Chicago is a top of debate among property owners, city government leaders and community members. The news in the beginning of 2018 says that Airbnb raised $2.9 million for homeless services.

Some argue that Airbnb rentals hurt the market.  They say that short-term rentals take away the option for longer term renters to claim space, leaving fewer rental options and driving up the prices. They also say that it takes away from the sense of community.

For these reasons, Chicago has put in regulations with the goal of keeping the sense of community and not driving up prices.

Proponents for Airbnb in Chicago know that the guests bring money into the Chicago communities where they are located. A visitor who might normally choose a hotel in the heart of Downtown Chicago instead chooses a unique rental in a lesser-known neighborhood. The restaurants, boutiques and other businesses in that area earn increased revenue as more guests stay in the area.

For Chicago property owners and investors, the home-sharing market offers a major benefit. In 2017, according to data from Zillow and Airdna, Short-term rentals on average made 40.1% more money than longer-term rentals. Airbnb investment properties give owners a major source of income to offset the cost of the mortgage. For homeowners who rent a room or the whole unit, home sharing is a way to supplement income or help pay for the home. For business owners with investment properties, it maximizes profits.

Chicago Regulation For Airbnb

While guests seem to want a more local experience through Airbnb, the growth has caused many cities to implement regulations. 

Chicago passed regulations in 2016, and a supplement in 2017, to better foster home sharing in Chicago. Airbnb property owners now must upgrade their homes and experiences. Some home sharing opponents feel there is room for more regulation. Here are some components of the regulations:

  • Extra tax on the income generated from the property
  • Cap on how many units in a 5+ unit building can be rented via Airbnb — 6 units or 25 percent of the total units, whichever is smaller
  • Requirement for hosts to keep records on guests
  • Inspections of rentals from building commissioners
  • Primary residence requirement for single-family homes and buildings with two to four units

Another component is the Prohibited Housing List. Essentially, the owner of a building can place units on the list, meaning those spaces are ineligible for renting on Airbnb. As of 2018, about 91,000 apartment and condo units are on the list. That may sound like a lot of units, but it’s only about 7.6 percent of all Chicago housing units, so there are plenty of properties not on the list.

The list of properties on the list is concentrated highly in the downtown area, especially for big condo buildings, although there are properties throughout the city that don’t allow home sharing. Always check before purchasing a property as a rental. No matter how tempting it is to rent out a unit for profit, ignoring the rules can result in fines of $1500-5000.

How to Invest in an Airbnb Property

Evaluate your readiness to jump into an Airbnb rental business with these questions:

  • Do you have the capital to invest or secure a loan for the property?
  • Can you cover the payments if you aren't able to rent out the place regularly?
  • Is the building suited to have short term rentals? (ie security, egress, maybe separate entrances)
  • Does your insurance allow for short-term rentals? (We know a few that do!)
  • Are you prepared for the possibility of damage to the property?
  • Do you want to manage all of the guests and increased turnover by yourself or with a management firm?
  • Do you know the latest regulations for Chicago Airbnb properties?
  • Do you have time to manage needy guests and bookings?
  • How much more income can you make, and is it worth it?
  • Will you handle cleaning, check-in and check-out, customer service and other issues yourself? If not, can you still make a profit when you hire someone to handle the work?

What makes a good Airbnb investment

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Most Airbnb rentals in Chicago are unique. They stand out as an experience to remember rather than just a place to stay while in Chicago. When considering investment opportunities for Airbnb property in Chicago, here are a few factors to consider:

1. Location

Proximity to the downtown is the name of the game. Imagine you are at traveler who has never been Chicago - you don't know about the neighborhoods or local tastes. Airbnb guests in Chicago want proxmity and safety!  Look at the location from a traveler's perspective. They want neighborhoods that are safe, close to amenities and give them easy access to other parts of the city.

Distance to public transportation is not as important as you think. While it helps for business travelers,  it is not as big of an issue because Chicago has Uber/Lyft. That said, public transportation helps because renters want access any attraction in the city. Investing in a property with a prime Chicago location increases your chances of filling up your calendar with rentals.

2. Compliance

Regulations in Chicago can change at any time. Make sure a potential investment property meets current Airbnb regulations set by the City of Chicago. Ensure the property isn’t on the Prohibited Housing List. Verify that the building association or homeowners’ association doesn’t have restrictions in place on home sharing.

3. Amenities

What amenities does the property offer, or can you offer? Does it have outdoor space, a patio, a hot tub, a pool table, great views or a gourmet kitchen? What about parking? Those extra touches make your Chicago Airbnb more appealing to Airbnb guests who want a unique, homey experience. 

4. Size

This is a sleeper. The size of the unit is an important factor because the bigger the unit, the more people you can sleep. The more people you can sleep, the more money you can potentially make (as long as it is compliant with Chicago's fire code!). 

Some Airbnb guests want to accommodate a whole family. Others use Airbnb to find even larger spaces for reunions, retreats or other large-group travel. 

5. Style and Character

Chicago homes with classic character and unique style often gain attention on Airbnb because pictures are one of the most important parts of your listing. 

You don’t need to buy an old church to have a popular rental option. You might choose a modern-style loft space or a vintage apartment with exposed brick walls.

From long-term to short-term rentals?

If you’re a property owner in Chicago, upgrading your home with Airbnb travelers in mind can be a ticket to making more profits with Airbnb.  Simple cosmetic updates or renovations can make your Airbnb more appealing.

Here are a few ideas to boost revenue:

  • Simple Guest Amenities

Simple additions to your home make for great guests stays. Think of the things we take for granted at home, sometimes. Maybe a rain showerhead or free Wi-Fi and free parking? A fireplace? Coffeemaker? 

  • Outdoor Space for Summer, Spring, Fall

Any outdoor space from a balcony to a backyard is a value-add to be included in pictures and to be upgraded for a great guest experience. Add seating if the space allows. Other options to upgrade outdoor spaces include plants, BBQs, hot tubs, and gardens.

  • Nice Finishes

You don't need to do a full renovation, but guests want to stay somewhere nice and clean. Take time to upgrade the kitchen, common areas, and any part of the property that guests may become attune to. 

  • Create Your Own Theme

You'd be amazed what some art and knick-knacks can do for your place and for the photos. Add some decorative touches to give it a distinct theme. If your space is an industrial-loft, play up the contemporary industrial vibe in your color choices, furniture and decorations.

  • Home away from home :)

How can you make your airbnb homey and have your guests feel like they are home away from home? Adding little accents that make it feel more like home help a lot! Hang artwork on the wall, places flowers in a vase and display coffee table books in the living room. Simple touches make a big impact.

One way to identify upgrades you need to make is to spend the night in your own rental from the perspective of an Airbnb traveler coming to Chicago. If you were to rent that space for a vacation, what would you like? What would you dislike? What would you change? 

What do you think of our guide to the growing Airbnb market in Chicago? It seems to continue to grow so don't get in too late!