Chicago Multifamily Owners: Are You Holding, Selling, or Reinvesting?

Question

For those of you who own 2–4 unit properties in Chicago, I'm curious what your long-term strategy looks like.

Are you holding onto your properties for rental income, considering selling while there's still buyer demand, or looking to leverage your equity into a larger investment?

As someone involved in real estate investing and development here in Chicago, I think one of the biggest decisions investors face is knowing when to hold an asset versus when to reposition their portfolio.

What factors would make you consider selling one of your multifamily properties today?

Lee Burns · Answer

I've been on the fence about this for a long time. Andrew Holmes really sold me on the idea of never selling, but just refinancing to tap into equity

Aaron Zimmerman · Answer

I’m currently holding onto my former house hack. At a sub 3% 30 year mortgage and steadily growing equity, I don’t see a reason to sell. I also don’t have a better place to put the proceeds

Marcus Auerbach · Answer

Selling is something you'd almost always regret. Real estate is a game played over decades, and wealth starts developing after the first ten years. If you are selling after 5 years, you went through all the trouble for very little money: seldom sell.

As a new investor, I did not fully understand this and had to course correct.. I did not buy the kind of assets, that are well positioned for decades and I had to trade out of some markets that were too low in quality for my long term goals to correct this mistake. We are doing this again now another decade later; we optimize for top quality tenants instead of cash flow. Eventually we will start rolling into DST's, but not there yet.

Paul De Luca · Answer

@Ashish Acharya makes an important point. When considering selling or not, you always want to consider "what is the highest and best use of my capital?" Investment opportunities don't exist in a vacuum, and so investments are evaluated in relation to the other available opportunities. If you decide to sell your property, you need to consider where you will direct the funds next.

Like @Patrick Krawczykowski mentioned, local economics are really important when considering what to do with your properties. Illinois is 2nd last in the country in new home construction (only behind Alaska) and in the Chicago metro area we have around 3 months of inventory which is still a strong seller's market. Chicago has consistently ranked at or near the top of home price growth over the past several years. It has been a similar story with rent growth.

Persistent high mortgage rates are going to continue to contribute to constrained inventory: sellers become buyers and rationally most people with a mortgage rate at 5% or lower are unlikely to buy into a more expensive market at higher prices unless they have to.

All that being said, if you have a severely underperforming property and it's giving you a lot of headaches (or you need the cash), it could make sense to sell. Otherwise, I think most people with rental properties are going to continue to hold.

I'm continuing to hold my properties and increase rents to offset inflation and other rising costs.

Ashish Acharya · Answer

Shuatequa, I think the biggest question I'd ask an investor considering selling is “What are you going to do with the equity afterward?” If the property is producing good cash flow and still fits the portfolio, selling just because it has appreciated may not necessarily be the best move. But if the property has become more capital intensive, has limited upside, or that equity could be put to work in a significantly better opportunity, repositioning can make a lot of sense.

I'd compare hold, sell and pay the tax, and sell with a properly structured 1031 exchange side by side.

Before making the decision, I'd want to know the property's adjusted basis, depreciation taken or allowable, remaining debt, selling costs, and estimated tax liability so I know what the actual after tax equity looks like. I'd also compare that against what the replacement investment could realistically produce. Sometimes the best move is to sell, sometimes it's to keep the property, and sometimes refinancing can provide access to equity without triggering a taxable sale.

For me, the question isn't just “Should I sell?” It's “Is this property still the best place for this equity to be invested?”

Feel free to DM me I’d be happy to send over a few resources that might be helpful.

Divin Kanyama · Answer

@Shuatequa Johnson For a 2–4 unit property, the decision should probably come down to what the equity is earning today versus what it could earn elsewhere. Strong cash flow, manageable maintenance, and favorable debt support holding. Selling becomes more compelling when taxes, insurance, deferred repairs, or tenant-management demands are compressing returns—or when the equity could materially improve cash flow in a larger property. In Chicago, upcoming capital work and local regulatory requirements also deserve a close look. Buyer demand matters, but it should be weighed against transaction costs, taxes, financing terms, and the loss of a well-performing asset.

Patrick Krawczykowski · Answer

Just look at housing starts, as long as we're still last in the nation our real estate isn't going to lose value anytime soon.

It's a great leading indicator for when a market might cool off.

Matthew Morrow · Answer

@Shuatequa Johnson Not in Chicago, but the same question comes up with our investor clients. It usually comes down to what the equity is earning where it sits versus what it could earn somewhere else, and whether a low fixed rate is worth more than the upside of moving. A sale makes the most sense when there's a clear next deal lined up, ideally through a 1031, not just because the market feels toppy.

Henry Lazerow · Answer

Holding but looking and ready to jump on another deal. Ideally something where can do cosmetic rehab, bring rents up and hold it forever on north side. Do cash out refis whenever rates are down but not now. Same strategy many of my clients are doing.

Added inventory is very low and cost to build is very high. This should continue to put upwards pressure on sales prices and drive rents higher in Chicago unlike cities for example Austin where it is very easy to add affordable supply.

Simon W. · Answer

I'd add the tax piece to the hold vs sell question, because it changes the math more than people expect. If you've owned a 2-4 flat for a while, you'll pay tax on the gain plus depreciation recapture on what you've deducted, so the cash you walk away with can be a lot smaller than the equity number on paper.

Before deciding, I'd run two numbers. First, what you'd actually net after selling costs and taxes. Second, what that net amount could earn somewhere else compared to what the building earns today. If the building's cash flow on that real net equity still looks decent, holding usually wins. If not, a 1031 into something bigger is worth a look so the full equity keeps working.

Agree with the sub 3% mortgage point. That cheap debt is part of the return and it's hard to replace.

Chicago Multifamily Owners: Are You Holding, Selling, or Reinvesting?

Chicago Multifamily Owners: Are You Holding, Selling, or Reinvesting?

Most Popular Reply

11 Replies