Are you holding on to a property in Chicago and you aren’t exactly sure why? Every day that you continue to own the property, you are spending money on it. Before you hold on to it for another day, consider the below points. It might be time to think about selling your Chicago home! How much does holding a property cost in Chicago? Keep reading to find out!
If you ask any seasoned property flipper, they’ll share a common piece of wisdom: the quicker you can flip a property, the more profit you’ll likely see. It’s a straightforward concept because, in reality, owning real estate comes with ongoing expenses. Holding onto a property for sentimental reasons or with the vague notion that you “might” use it someday is essentially a waste of money. Your real estate investments should be actively working for you right now. This can mean it serves as your primary residence, generates a steady monthly income, or offers recreational benefits. If your property in Chicago isn’t fulfilling one of these roles, it might be time to seriously consider selling it. Don’t let your hard-earned money go down the drain on a property that isn’t contributing to your financial well-being.
Costs of Holding A Property In Chicago
Property Taxes
Property taxes can be quite expensive, and with recent changes to the tax code, these taxes are no longer deductible. As long as your name is on the title as the homeowner, you’ll be responsible for paying these taxes. However, by selling your house promptly, you can immediately eliminate this tax burden. This can free up your finances and relieve you of the ongoing expense associated with owning the property.
Utilities
Monthly utility bills can accumulate rapidly. If you tally up what you’ve spent on electricity, water, gas, TV, and internet, you might be shocked at how high the total is. Even if you’re not living in the home while trying to sell it, you’ll still need to keep the lights and water on for potential buyers who come to view the property. If your house is older and less energy-efficient, these utility costs can be significantly higher than what you would pay in a newer, more energy-efficient home.
Maintenance & Repairs
A good rule of thumb for estimating maintenance costs is known as the one percent rule. This guideline suggests that you should budget approximately one percent of your home’s purchase price for annual maintenance expenses. For instance, if you bought your house for $250,000, you should plan to spend around $2,500 each year on upkeep. While these figures can vary significantly based on the age and condition of the property, as well as local factors, many real estate investors use this simple formula to get a rough estimate of their maintenance costs.
Homeowners Insurance
The premium for a homeowner’s insurance policy can vary significantly based on a number of factors, including the house’s size, age, construction type, and its location. For an average home in Chicago, you can typically expect to pay over $1,000 annually. This cost can be influenced by the local climate, crime rates, and even proximity to fire stations or bodies of water. Homes in areas prone to natural disasters such as floods, earthquakes, or hurricanes may face higher premiums due to the increased risk. Additionally, specific features of the home, such as having a swimming pool or an older roof, can also impact the insurance rate. Therefore, it’s important to carefully consider these factors when budgeting for homeowner’s insurance in Chicago.
Mortgage Payments
It can be challenging to come up with a mortgage payment every single month for a property you no longer want to own. On average, the monthly mortgage payment nationwide exceeds $1,000. Many people find themselves struggling to pay thousands of dollars each month, which can create significant financial stress and strain. In reality, they might be much better off selling the property. By doing so, they can relieve themselves of the ongoing financial burden and potentially improve their overall financial situation. Selling the property can free up funds that can be better utilized elsewhere, whether for paying down debt, investing, or simply improving their quality of life.
Opportunity Costs
Consider what else you could be doing with the money tied up in your house. You might be missing out on a better home or investment opportunity. Take a look at the current market and evaluate if you are genuinely happy with your current situation. If your property isn’t providing any tangible benefits, it might be time to find something new.
Selling your home now, rather than later, can help you keep more money in your pocket. Each day you continue to own the property, you remain financially responsible for it, including all the bills and maintenance costs that quickly add up. Take the time to run the numbers yourself and make the decision that best suits your financial goals and personal circumstances.