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Author: Mark Ainely | Partner GC Realty & Development & Co-Host Straight Up Chicago Investor Podcast
GC Realty gets hundreds of inquiries every month for property management, and a large chunk of those people are stuck on the same question. Should I sell, or should I rent it out? So we spend real time with them breaking down the opportunity they already have, why Chicago is a great place to be invested, and all the ways you can make money by keeping the property as a rental. This blog is that same breakdown. If you are sitting on a rental, or you are about to move out of your current home and you are not sure what to do with it, keep reading. You are in a better spot than you think.
Key Takeaways
Finding a property is the hardest part of investing, and if you already own one, you are past it.
Chicago two to four unit prices were up almost 9% year over year as of May, the 30th straight month of gains.
Supply is sitting under four months, which keeps this a seller's market and makes it hard to buy back in later.
Rents are stable and still have room to run, which supports holding.
There are many ways a single rental makes you money, not just cash flow.
Do not guess. Run your real numbers before you decide.
The Hardest Part Is Acquiring
Here is the thing I tell everyone. The single hardest part of being a real estate investor is finding a good property to buy. Right now that is harder than it has been in a long time.
Inventory is tight. Good buildings hit the market and they are gone fast. Investors are fighting each other for deals, and plenty of them are leaving money in just to get one under contract.
Now think about where you sit. You already own the property. Or you are about to move and you already own the home you live in. You did the hard part. You do not have to shop, compete, overpay, or walk a dozen inspections to find the one. It is already yours.
When you sell, you hand that back. You give up the exact thing every other investor in the city is trying to get. And if you ever want back in, you start over at square one, in a market where square one is expensive and slow.
That does not mean holding is always right. But it does mean you should think hard before you give up an asset you already fought to own.
Why Chicago Is A Strong Place To Hold
Let me give you my honest read on the market, because the numbers matter more than a feeling you got from one bad month.
Going back to May, prices on two to four unit buildings were up almost 9% year over year. And that was not a one month blip. That was the 30th straight month of gains. For two and a half years, prices in this space have kept climbing.
A big reason is simple. There is far more demand than supply. Months of supply on these buildings is under four months. That means it would take about three months to clear everything on the market if nothing new got listed. That is a seller's market, plain and simple. For perspective, we hit 12 or 13 months of supply back in 2008. We are nowhere near that.
That supply problem is not going away fast. Nobody is building a bunch of new two to four unit buildings. And no owner sitting on a 2.5% interest rate is rushing to sell. So if you ask me whether prices are higher or lower a year from now, I would bet a lot of money they are higher.
If you are in the suburbs, this is even more true. Private rental listings out there are at an all time low. Here is why that keeps happening. Every time an investor sells a single family home in suburban Cook, DuPage, or Kane County, an owner occupant buys it to live in. That home comes out of the rental stock forever. It does not come back. So every sale shrinks the pool of available rentals, which makes the one you already own even more valuable to hold.
On top of that, rents are stable and I think they still have room to run. That is a big deal when you are deciding whether to hold. A stable rental market means steady income while the property keeps building value.
All The Ways You Make Money By Holding
A lot of people think a rental only makes money if the rent check is bigger than the mortgage payment. That is just one piece. A single property can pay you in several ways at the same time.
You have cash flow. You have appreciation, which we just saw is real in this market. You have your tenant paying down your loan every month, which builds your equity for you. You have tax benefits. And you have a built in hedge against inflation, since rents tend to rise over time while your fixed mortgage payment stays the same.
I broke all of this down in detail already, so I will not repeat the whole thing here. If you want the full picture, read our post on the 5 ways Chicago landlords make money on a single property. Once you see all five stacked together, the case for holding gets a lot stronger.
Do Not Guess, Run Your Numbers
The sell versus hold decision should never come down to a gut feeling. It should come down to your numbers.
We built a tool for exactly this. Our Rent vs. Sell Calculator lets you see both paths side by side. You plug in your details and you can compare what you walk away with if you sell against what the property could earn if you hold it. It takes the guesswork out and turns a stressful decision into a clear one.
Run it before you list. You might be surprised how the hold side stacks up once all the pieces are on the table.
Curious What It Would Actually Rent For
One number that changes the whole decision is your real rent. Not what you think you can get. What the market will actually pay right now.
Price it too low and you lose money every single month. Price it too high and the unit can sit vacant longer than it should, which also costs you. Getting that number right is the difference between a rental that works and one that frustrates you.
If you are even a little curious what your property could rent for today, grab a free rental analysis from our team. We will look at your property and tell you what it could bring in this market. Once you have that number, the sell versus hold math gets a whole lot clearer.
Frequently Asked Questions
Should I sell my house or rent it out when I move? It depends on your numbers, but do not overlook what you already have. You own a property in a market where inventory is tight and hard to buy into. If you sell, you give that up and start over later at a higher price. Run the rent versus sell math before you decide.
Is now a good time to hold a rental in Chicago? The fundamentals favor holding. Prices have climbed for 30 straight months, supply is under four months, and rents are stable with room to run. That combination supports keeping the asset rather than selling into a market you may not be able to buy back into.
How do I know what my property will rent for? Get a free rental analysis. Guessing on rent is one of the most common ways owners lose money. Too low and you leave cash on the table every month. Too high and you sit vacant. A real analysis gives you the accurate number to build your decision on.
Does a rental only make money through monthly cash flow? No. Cash flow is just one piece. You also earn through appreciation, your tenant paying down your loan, tax benefits, and an inflation hedge as rents rise over time. Stacked together, those often matter more than the monthly cash flow alone.
What if the market drops after I decide to hold? No decision is risk free, but that is true of selling too. Rates, taxes, and surprises are always part of real estate. The core fact here is that demand far outweighs supply, and that is not changing quickly. Holding a real asset through a stable rental market is a reasonable bet.
Don't Go At This Alone!
Deciding whether to sell or hold is part numbers and part knowing what you are really sitting on, and that is exactly what we do every day. At GC Realty & Development we manage around 1,500 units across Chicagoland. We have run the rent versus sell math with hundreds of owners, priced thousands of units, and helped people see the opportunity they were about to walk away from. Our mission is simple. We help you buy your time back and lower your risk so your property works for you instead of the other way around. Whether you keep this one rental or grow a whole portfolio, you do not have to figure it out by yourself.
