Chicago 2-bed condo at $395k: does $1,341 rent leave any margin?

[RealHorizon]

I’m considering a Chicago 2-bed condo priced at $395,000, with expected rent of $1,341/month. That is roughly a 4.1% gross yield before vacancy, management, routine maintenance and a larger-repair reserve.

Once those go into my spreadsheet, the margin becomes uncomfortable. The building appears sound, but rental rules could also change the outcome. Which Chicago cost am I most likely understating—property tax, insurance, condo expenses or tenant turnover? What net yield would justify the risk for you?

 

[frame.grand]

At 4.1% gross, I would focus first on property tax and the condo association costs, including the possibility of a special assessment. Either could overwhelm the remaining income before financing is considered. Is $1,341 supported by an existing lease or only an estimate, and does the association allow rentals without restrictions? I wouldn’t choose a target net yield until those figures are confirmed.

 

[view.even]

I’d add a caveat: management may not be the deciding expense here. Even if you self-manage, one vacancy and turnover cycle could erase much of an already narrow annual margin. Run the deal with the current association payment, insurance, property tax and financing terms, then stress both rent and occupancy. If it only works with continuous tenancy and no major assessment, the purchase price—not the reserve assumption—is probably the issue.