Deciding whether to sell or rent your home is an important decision that many homeowners eventually face, particularly todays ever changing Chicago real estate market. Each option has its benefits and drawbacks, and the best decision for you depends on various factors including financial goals, market conditions, and personal circumstances. In this article, we'll cover the major points to consider and point you to some free tools to help you calculate a result to make an informed decision.
Assessing Your Financial Goals
The first step is to assess your financial goals. What are you trying to achieve? Selling your home will typically offer a much larger one-time payout compared to the ongoing income you’d receive from renting. Renting or leasing your property can provide a steady monthly income and the likely benefits of property appreciation and equity build up.
Immediate Cash Needs:
- Selling: If you need a lump sum of cash for a new home, debt repayment, or other major expenses, selling might be the best option. It provides a one-time influx of money.
- Renting: Renting out your property can generate a steady stream of income. This option is ideal if you don’t have an immediate need for the funds and prefer to earn income over the long term.
Long-Term Investment:
- Selling: If the property's value has appreciated significantly and you anticipate a market downturn, selling could help you capitalize on current market conditions.
- Renting: Real estate is a popular long term investment opportunity. In the long run, property values typically increase over time – so keeping the home in your portfolio and generating rental income is a great option.
Market Conditions in Chicago
The next consideration is the local real estate market. The Chicago market varies by neighborhood and unemployment, population growth and local amenities like restaurants, parks and transportation all have an impact on property values and rental income
Current Market Value:
- Check recent sales of similar homes in your area.
- Our real estate brokerage team can provide a professional market comparison.
Rental Market Analysis:
- Check the average rental rate for your neighborhood. Are there many rental properties in your area? Low vacancy rates and high demand for rental properties can create a positive rental environment and increase income.
- Our team can provide a free Rent Analysis, just click the link to request.
Personal Circumstances and Preferences
Your lifestyle and personal circumstances play a significant role in this decision.
Future Plans:
- If you plan to move back to your home, renting out your home can keep the property in your portfolio.
- If you're relocating permanently, selling might simplify your financial and logistical situation.
Property Management:
- Selling: Once the sale is complete, you no longer have to worry about maintenance or tenant issues.
- Renting: Managing a rental property requires effort. Self-managing means handling tenant screenings, maintenance, and rent collection on your own, which can be time-consuming and stressful. Hiring a professional property management company, like ours, can alleviate these burdens by providing comprehensive services to manage your rental efficiently.
Tax Implications
Each option has different tax consequences.
- Selling:
- Capital gains tax may apply, however there are exceptions for primary residences that can help lower the overall tax rate.
- Renting:
- Rental income is considered earned income and is taxable. You can deduct operating expenses like mortgage interest, property taxes, upkeep and depreciation which can help lower the overall taxable income.
Emotional Attachment
Consider the emotional aspect of selling versus renting. Selling means saying goodbye to a home filled with memories, while renting allows you to retain ownership and possibly return in the future.
Conclusion
The decision to sell or rent your home in Chicago depends on many factors, involving financial considerations, market conditions, personal circumstances, and future plans. As both a licensed sales brokerage and a professional property management company, we can help regardless of your choice.
If you are leaning towards renting, our property management services can help you avoid common pitfalls and ensure your rental property is managed efficiently and profitably. If selling is your preferred route, our experienced real estate agents can guide you through the process to get your property sold.
To make an informed decision, we invite you to use our free Rent vs Sell Calculator on our website, which allows you to input key information and see the financial results of renting versus selling. Contact us today for a personalized consultation and let us help you navigate this important decision with confidence.
