If I choose the rental, then all income generated will be taxable income moving forward, because none will be off-set by the interest I could deduct.  

Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers.

Karl's Mortgage Calculator - This is a downloadable app for your phone. 

@Brett Coultas if you're a newbie, you want to be careful of an "investor friendly" agent selling you something they truly don't understand:(95+% of agents only know how to handle owner-occupied transactions - you can verify this by asking them calculate ROI for you or Cash-On-Cash!

Entity structuring, basis calculation (i.e. breakout between building and land), deductible expenses, etc.

However, I would caution you on these calculations.

Calculate how much more in interest, lost profits, etc it will cost you to have this “blip” on your credit report.  

And your calculation makes sense for a property that you plan to keep forever so to speak. 

Others are more hands off and want the data but don't need to calculate to the penny.

Use a quitclaim or warranty deed to transfer the title, and be prepared to pay Chicago’s transfer tax, calculated at $7.50 per $1,000 of the property’s fair market value.