There was someone considering buying a condo with extra money before retirement to rent it out. They weighed the options of making a profit through sales or generating monthly income through rentals. Ultimately, they chose the rental route, but Chicago has specific rental ordinances that require a different approach from the start.

Starting with rental prices, the average rent in Chicago is $2,525 according to RentCafe. This is a 3.73 percent increase compared to the previous year. Zumper reported the median rent for the same year in August as $2,095. The reason for the over $400 difference between the two figures seems to be due to the different quality of listings included in the samples. When comparing downtown and suburban neighborhoods side by side, it becomes clear that rental prices can vary significantly based on location, even for the same number of bedrooms.

Once the rent is set, it's time to find tenants. Posting ads on Zillow and Apartments.com is standard practice. When inquiries come in, don't rush to sign a lease; you need to check the screening criteria.

• Credit score and payment history
• Proof of income
• Previous rental history
• Consent for background check

The screening stage is where many feel that renting requires more effort than selling, but if done thoroughly, it can actually reduce management burdens later on.

Pay attention to the advertising photos as well; they should be as carefully considered as sales listings. Including bright photos taken during the day along with accurate bedroom counts and details like the location of the washer can increase inquiries. In Chicago, rental ads must also comply with the Fair Housing Act, so avoid expressions that suggest only certain types of tenants will be accepted.

The lease must clearly outline the rent amount, payment dates, security deposit, and maintenance responsibilities. Chicago is subject to the Residential Landlord and Tenant Ordinance, abbreviated as RLTO, which has a security deposit cap of 1.5 months' rent, differing from other areas in Illinois. If there are two or more tenants, the security deposit must be kept in an interest-bearing account, and the bank and account information must be provided in writing within 14 days of receipt. The security deposit interest rate for Chicago in 2026 is set at 0.01 percent. The deposit must be returned within 30 days after the tenant moves out, or itemized deductions must be communicated in writing, and failure to comply may result in having to pay double the deposit plus attorney fees.

Another difference from sales is that leases must include an addendum summarizing the Chicago security deposit interest rate, which is renewed annually. Failing to include this document can work against landlords in case of future disputes. While such paperwork is not required for sales, these administrative procedures in rentals can serve as safeguards to protect income.

Insurance is also an often-overlooked aspect. Homeowner's insurance and rental insurance have different coverage, so it's important to inform the insurance company before bringing in tenants and make adjustments if necessary. As the lease nears its end, it's wise to decide in advance whether to renew or adjust the rent and notify the tenant to reduce vacancy periods.

Including a clause in the lease that requires tenants to obtain renter's insurance is also common practice, as landlord insurance does not cover damage to tenants' personal belongings due to fire or theft.

During the tenant screening process, it is essential to use only objective criteria such as credit, income, and rental history. It is entirely possible to select stable tenants while adhering to the Fair Housing Act.

When attempting to terminate a lease without special reasons, the notice period differs from other areas. If the residence period is less than 6 months, notice must be given 30 days in advance; for 6 months to 3 years, 60 days; and for over 3 years, 120 days. Compared to those aiming for profit through sales, renting does come with the burden of keeping track of these regulations, but the clear advantage is the ability to create a steady cash flow. This article is intended for general informational purposes, and it is advisable to consult a real estate professional or attorney before entering into any contracts.