Rent Or Buy In Old Town? A Numbers‑First Framework

Thinking about buying in Old Town but not sure if the numbers beat renting for the next 1 to 3 years? You are not alone. With HOA fees, taxes, and closing costs, the math can feel confusing fast. This guide gives you a clear, numbers-first framework to compare renting and buying, using realistic Old Town condo ranges and a simple worked example. By the end, you will know what to collect, how to run scenarios, and what would need to be true for buying to make financial sense in a short horizon. Let’s dive in.

Quick take for 12–36 months

For many Old Town renters planning a 1 to 3 year stay, renting often costs less once you include HOA fees, Cook County property taxes, and two rounds of closing costs. Buying can still win if a few conditions line up. Look for a low HOA, a favorable mortgage rate, a large down payment, and meaningful local price appreciation during your hold.

Key drivers to watch:

• Upfront and recurring ownership costs, including HOA, taxes, insurance, and maintenance.
• Transaction friction if you sell within 1–3 years, especially seller commission and buyer closing costs.
• Short-term price and rent movement, which can swing the outcome.
• Mortgage rate and product choice if you know you will not hold long.

Monthly cost framework

Compare your true monthly rent to a full monthly ownership cost. List everything in each bucket.

Monthly rent

• Base rent
• Renter’s insurance
• Utilities you pay as a tenant

Monthly ownership

• Mortgage principal and interest
• HOA or condo assessments
• Property tax estimate
• Condo insurance (HO‑6)
• Maintenance reserve
• Utilities
• PMI if your down payment is under 20 percent

Helpful ranges for Old Town condos

Use these plausible ranges to test scenarios and confirm current numbers from listings, lenders, and condo documents.

• Mortgage rate to model: 5.0% to 8.0% for a 30‑year fixed. Consider a 7/1 ARM for a planned short hold, but note reset risk.
• Down payment: 3% to 20% common. PMI applies below 20% down.
• HOA fees: about $200 to $1,200+ per month. Many mid-range buildings fall around $300 to $700 per month.
• Cook County property taxes: about 1.5% to 2.5% of purchase price per year, paid in installments. Convert to a monthly estimate for your model.
• Condo insurance: about $300 to $1,200 per year.
• Maintenance out of pocket: budget 0.5% to 1.5% of purchase price per year for repairs and potential special assessments. For condos, model toward the lower half but keep a cushion.

How to estimate your payment

1. Get price, down payment, loan type, and rate. Calculate monthly principal and interest with a standard amortization formula.
2. Add HOA.
3. Add monthly property tax: purchase price × effective tax rate ÷ 12.
4. Add condo insurance and a maintenance reserve: purchase price × annual maintenance rate ÷ 12.
5. Add utilities and PMI if applicable.
6. Compare to your rent plus renter’s insurance and tenant-paid utilities.

Total cost over 12–36 months

Monthly comparisons are a start, but short holds are decided by total in-and-out cash over your horizon.

Total Owner Cost over H months =

• Down payment

• Buyer closing costs
• Sum of monthly costs over H months (mortgage interest, HOA, property tax, insurance, maintenance, utilities, PMI)
• Selling costs at sale – Net sale proceeds

Net sale proceeds = sale price minus outstanding mortgage principal minus seller closing costs and other sale charges.

Model several scenarios:

• Buyer closing costs: about 2% to 5% of the purchase price.
• Seller commission: about 5% to 6% of the sale price.
• Price appreciation per year: test negative, flat, and positive, such as –3% to +6%.
• Rent growth per year: test 0% to +4%.
• Amortization: expect very little principal paid off in the first 1–3 years.

HYPOTHETICAL Old Town example

This is a simplified, hypothetical example to show the math. Adjust to your numbers.

Assumptions:

• Purchase price: $500,000
• Down payment: 10% ($50,000)
• Loan: $450,000, 30‑year fixed at 6.5%
• HOA: $500 per month
• Property tax: 2.0% per year → about $833 per month
• Condo insurance: $600 per year → $50 per month
• Maintenance reserve: 1% per year → about $417 per month
• Buyer closing costs: 3% ($15,000)
• Seller commission: 5% of sale price
• Rent alternative: $2,800 per month
• Price scenarios: –2% per year, 0%, and +4% per year

Mortgage principal and interest on $450,000 at 6.5% is about $2,841 per month.

Monthly ownership total:

• P&I $2,841 + HOA $500 + tax $833 + insurance $50 + maintenance $417 = about $4,641

Versus rent: $2,800 per month. Monthly ownership is higher by about $1,841.

24‑month total cost snapshot at 0% price change:

• Upfront cash outlay: down payment $50,000 + buyer closing $15,000 = $65,000
• Monthly owner costs over 24 months: $4,641 × 24 ≈ $111,384
• Total cash out before sale ≈ $176,384
• Sale price at 24 months: $500,000
• Outstanding mortgage principal after 24 months: roughly $441,000
• Seller commission at 5%: about $25,000
• Net proceeds ≈ $500,000 – $441,000 – $25,000 = $34,000
• Net total cost ≈ $176,384 – $34,000 = $142,384

Renting for 24 months at $2,800:

• Rent payments: $2,800 × 24 = $67,200
• Add renter insurance and utilities at a modest estimate: about $2,400
• Total rent outlay ≈ $69,600

Interpretation: In this hypothetical, buying for 2 years costs much more than renting. The gap narrows if prices rise at +4% per year, but short horizons usually need strong appreciation or unusually low ownership costs to overcome HOA, taxes, and transaction fees.

What changes the outcome

• Higher rent relative to ownership makes buying more attractive.
• Lower HOA and tax rate materially reduce the owner’s monthly burn.
• Lower mortgage rate, larger down payment, or using an ARM for a short planned hold can improve monthly numbers. There is adjustment risk if you keep the home past the fixed period.
• Positive appreciation helps at sale. Negative or flat prices hurt.
• Cutting transaction costs helps. Closing credits, reduced commissions, or longer hold times spread fixed costs over more months.

Sensitivity checklist

For a confident decision, run several versions and timeframes.

• Vary purchase price by ±10% to 20%.
• Test HOA ±$200 to $500 per month.
• Model mortgage rates ±1.0% to 1.5%.
• Run price scenarios: negative, flat, modest positive.
• Compare 12, 24, and 36 months, not just one hold period.
• Add a one-time estimate for early sale prep and moving.

Non-financial Old Town factors

Numbers matter, but lifestyle and risk do too, especially in a short hold.

• Flexibility vs stability. If you might change jobs or neighborhoods, a lease is easier to exit than a sale.
• Amenities and HOA rules. Many Old Town condos offer door staff, gyms, parking, and storage. Check rules for subletting, pet policies, and short-term rentals.
• Liquidity and seasonality. In strong seasons, some buildings move quickly. In slower markets, time on market can stretch and add carrying costs.
• Special assessments and reserves. Review board minutes and reserve studies. A special assessment soon after you buy can change your math.
• Appraisal and financing risk. A low appraisal can force extra cash at closing or kill a deal.
• Neighborhood fit and commute. Old Town’s proximity to the lakefront and downtown is a draw. Decide if that premium beats renting nearby at a lower cost.

Document checklist before you buy

Gather these items to build a reliable model and reduce surprises.

• Condo association budget, reserve study, and recent meeting minutes
• Condo resale disclosure package and HOA fee details, including what utilities are covered
• Recent property tax bill or effective tax rate estimates for similar condos
• Lender pre-approval and rate quotes for 30‑year fixed vs 7/1 ARM
• Buyer closing cost estimates from your agent or title company
• HO‑6 insurance quote and a realistic maintenance reserve
• Comparable rent options to test a true rent alternative

Practical decision rules

• If you expect to stay under 3 years and cannot show likely appreciation or clear monthly savings versus rent, renting is likely cheaper after transaction costs.
• Buying gets more compelling if you have a large down payment, a low HOA and effective tax rate, a purchase price that compares favorably to rent, and a rate advantage.
• If you choose an ARM for a short hold, be honest about plans. Keep a margin for change in case you need to hold longer.
• Re-run your model when any input moves. Small changes in HOA, rate, or sale price can flip the result.

How we can help

You do not have to solve this alone. If you plan to stay in or near Old Town, we can help you pressure test your numbers and line up the best next step. Our team runs a fast, no-fee, concierge rental search for downtown neighborhoods and also represents condo buyers and sellers. We will show you current rent comps and real HOA and tax numbers from actual buildings so your decision is grounded in reality.

If you want a tailored rent list, escorted showing blocks, or a numbers-first buyer consult, connect with The Michael Scavo Group. We will help you compare options and move with confidence.

FAQs

Does buying ever beat renting for 1–3 years in Old Town?

• Yes, but usually only when ownership costs are unusually low versus rent or when you expect meaningful appreciation. A large down payment, low HOA and taxes, and favorable rates help.

How much are typical HOA fees and are assessments common?

• Many Old Town condos fall around $300 to $700 per month, with a broader range of about $200 to $1,200+. Special assessments can happen, so review the budget, reserves, and board minutes.

Do I get tax benefits if I sell within 2–3 years?

• Mortgage interest deductions may be limited depending on your tax situation, and the primary residence capital gains exclusion generally requires two years of ownership and use. Consult a tax advisor.

What hidden costs come with selling quickly?

• Expect about 5% to 6% in seller commission plus closing costs, possible staging or repairs, and timing risk if the market slows. These costs can outweigh gains in short holds.

Should I consider an ARM if I only plan to own briefly?

• A 7/1 ARM can lower your initial rate and monthly payment, which helps your model. There is risk if you keep the home past the fixed period or if refinancing is not attractive later.

How do I estimate the true month-to-month difference?

• Add mortgage principal and interest, HOA, monthly property tax, insurance, maintenance, utilities, and PMI if needed. Compare that total to rent plus renter’s insurance and tenant utilities, then test multiple scenarios.