Illinois high tax issue - buying vs renting

3 Replies

What are your thoughts on buying single family house vs townhomes vs renting in Chicago. I wanted to buy vs rent to put money in equity but the Illinois tax is so high that it equates to ~8 months of rent. Townhomes are better in terms of tax but hoa makes it even. Are we just breaking even If we invest as a primary residence?

@Jay Kumar I am not sure what your timeline will be for living here, but if you are in Illinois for a while it probably makes sense to buy. What areas are you looking in though? There is a big difference between areas of the city versus the suburbs. I have personally seen quite a bit of appreciation here, and I am very glad I have owned a home over the past seven years! My two homes have helped me purchase three apartment buildings with all the appreciation! 

I would also recommend you focus on buying below market value. You don't necessarily need to find a distressed deal, but it helps if you can find an estate sale, short sale or a little old lady home. 

The decision should include a couple of additional factors.

1. How long will you live there?

2. What kind of equity growth will you receive from appreciation?

3. What is your cash flow BEFORE purchase?

Investing has both long range and short range goals.

Have you looked at a duplex where you could rent the other unit to pay the property taxes?

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