Mid-Deal Regrets on a Small MF in Chicago

Real Estate Broker · Northeast PA · Member since 2017 · 2k+ posts · 2k+ votes

After plowing through the above narrative, I'm left wondering:

With all the red flags waving at you, what is so compelling about this particular deal that you would continue on to the closing?

That is not a trick question. I'd really like to know.

Rule #1 in negotiation: the party who wants it most, LOSES.

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Lauren Mattern

OP

Member since 2018 · 5 posts · 7 votes

7mo

Thx @Marc Winter - I think with all the road bumps it's still probably a good deal - but it's not as good of math as I'd hoped. I guess I need to run and rerun my deal goals, include a little buffer knowing I'll probably get another surprise, and then just act accordingly.

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Aaron ZimmermanBusiness Member

Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes

7mo

There are always twists and turns in real estate so some things are unavoidable/unforeseeable. That said, here's what I'd do:

1. Lending - connect with Mike Facchini at fairway mortgage. He is the man when it comes to lending and there will be no bait and switch.

2. On insurance, what kind of coverage do you have? Assuming it's a homeowner's policy, correct? I'd think for that building, it has to be at least $2.5 -3k with the replacement cost.

3. On deal strategy, have you looked at the utility bills you'd be covering such as water? Have you done a sewer scope? Have you evaluated the roof?

4. Favorite agents - If this deal falls through and you're still looking in West Town, I'd recommend @Sarita Scherpereel since she lives in the area. I'd also recommend @Victor So - he is a great realtor and has house hacked many properties.

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Jules Aton

MD/DC · Member since 2024 · 1k+ posts · 1k+ votes

7mo

In my experience the good deals with a lot of moving parts are usually fraught with annoyances which is what you are describing. If it’s still a decent deal which can be hard to find now consider whether you really want to offer an ultimatum which generally causes more discord than benefit or back out and possibly lose your deposit. Significant life changes are even more challenging when combined with kiddos especially an infant so it is a huge plus that you have family support. Wishing you the best.

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Drew SygitBusiness Member

Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes

7mo

Quote from @Lauren Mattern:

It's been a rollercoaster as we look to buy our first small MF (four flat) in Chicago. This market moves fast and it seems like a few due diligence items were poorly handled on the part of us and our realtor leading up to offer and then definitely leading up to inspection. In sum, every single variable changed. We (the buyers) verified and caught everything during due diligence period (better than closing!) but the lack of strategy from the "real estate professionals" helping us is wild to me. Curveballs include: bait and switch on interest rate quoted from mortgage broker, taxes wrong in MLS (old #s), insurance quotes are 4x what the auto quotes are in all the real estate portals, and then there is a tenant timing issue. It feels like every single detail is designed to catfish buyers into getting too far into deals they feel sunk cost pressure on. The property is at a good price ($925k for a West Town four flat that's been pretty run into the ground w/ no rent increase in 20 years) but all the other variables throw off our deal math. It's highly feasible to get it to a $1.1M building with $100k of work over two years). Current deal math: we can get this thing at $6,150 monthly carrying cost (all factors including utilities except our ongoing maintenance budget) and we assume we'll need to put in 100k of work over the next 3 years (good news is not all at once, we can cash flow it). I think we can someday get in the $8ks on rent range - after a long stabilization period (and we are set to live there so not counting that period). We flagged a month ago that although the contract has a fast closing date - there are some medium-term tenants subject to longer notice on move outs. This apparently was never discussed with the seller (we assumed it had been given we mentioned it three times to no response from agent). I don't like operating in this environment of lack of communication. We are now in a period where we don't want to close until its vacant (except one tenant we have screened and trust) so pushes closing date to July 1. We already got our current condo under rental contract (at suggestion of mortgage broker, to improve residuals math) for May 1, so now I'm looking at a two month gap with a newborn - hello in-laws! I'm not mad there are twists, but they seem VERY avoidable. Next steps: I'm requesting immediate confirmation on seller willingness to close July 1 not sooner (we don't want liability of super tricky unvetted tenants) - or we close whenever its vacant if he wants to get them to agree to sooner) and if that gets a yes I think we can salvage the deal. If not, I walk.

Questions for this group:

- Anything else I'm missing I should be watching for on deal strategy?

- Any favorite Chicago small MF agents in case this deal dies and we start over w/ someone specialized?

- Any favorite insurance options we should try (8 quotes so far, lowest is 4x the MLS estimate) - owner occupy 2 flats, 2 other flats rented, 1880s building, and roof only has five years of life left (that was a no-go for two companies). Lowest quote now is $475 per month

- Methods to verify the mortgage rate without it moving on us! My trust is shaken on that... We operate super transparent across board so all the "surprise factors" are getting annoying across the deal variables - we flagged all factors earlier. I shouldn't complain - I think we can still land it at a good rate - but the constant shiftiness scares me.

- Tenants have 90 day notice period due to length of tenure - we flagged this a month ago but apparently it's news to all the agents and seller just now -eye roll. Is it common practice for seller to able to work out agreement for 30 day notice with them? E.g., I'd give back $5k in seller credit if they put it toward tenant move out/support in exchange for early departure if it sped up schedule.

Then there's of course the life discussion for a different forum: Will I be okay staying with family for two months with a newborn? :)

You mean you agent is more, "commission-friendly" than "investor-friendly"?

How did you screen them?

Over 95% of agents only know how to deal with owner-occupied SFR transactions - which are mostly emotionally-based transactions - not analytical at all!

Why are you surprised the seller is "useless"?
- You already stated they drove the property into the ground.
How do you think they did that?

I'd be looking to renegotiate a lower price.

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Henry Lazerow

Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes

7mo

That sounds like a solid price point. You need an agent that does due dilligance upfront. I always search the actual taxes on city site before sending offers as well as check for violations, etc. as the info on MLS is often very wrong. As for tenants its rare they will make it vacant pre close but if any concerns would ask for proof they are up to date on payments. It sucks but is part of Chicago rules the notice periods and sellers do not want to kick people out when do not yet know if the place will forsure sell, I always try to have sellers give notice of month to month and get tenants on board in advance but it is not always possible. For insurance feel free to PM me and I can send you the 2 agents I have found to be cheapest for clients on the big 2 to 4 units, I also have good lenders for the 2-4s that stay on their quoted rates.

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Patricia Steiner

Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes

7mo

Huh? I'm concerned by the lack of knowledge that you are attributing to your realtor. There's plenty of stupid here to go around. The taxes in the MLS are not wrong...they are the current taxes that the seller is paying - not what the buyer will pay. Always has been, always will be - because what the buyer pays is based on the purchase price which doesn't exist when listed, right? The property tax office in every muncipality has an estimation tool that gives a range of the buyer's potential taxes. Insurance - if you're using real estate portals, you will always be wrong. The portals are for 'entertainment value only' - they don't consider condition, location, and other factors. That's not a bait and switch - that's reality. Lender: your lender should have given you a good faith estimate within 3 days after application that would provide you with the costs associated with the transaction; none of it should have been a surprise. You can lock your rate for a fee if you're as far out as it sounds you are from closing but until then 'you're living on the edge.' In any case, the rate is the least of your issues here.

You're not going to like the rest of this either so please put on your coat of armour. I don't think you're ready for this investment on many levels including the age of the building, hoping rents will increase and rates won't 'move' on you (they will; reality sucks), the lack of trusted and knowledgeable advisors...please discontinue using any online portal - aka 'real estate porn.' I hope you'll step back and realize that what you actually control in this transaction is very little yet you have your financial well-being riding on it.

I offer this as an investor, owner of a 1925 money pit - and I assure you that these 'historic' buildings are the gift that 'keep on taking,' and an investment Broker of a private client firm that I own. Real estate mistakes are painful and costly. I don't want that for you.

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Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
7mo
Quote from @Patricia Steiner:

Huh? I'm concerned by the lack of knowledge that you are attributing to your realtor. There's plenty of stupid here to go around. The taxes in the MLS are not wrong...they are the current taxes that the seller is paying - not what the buyer will pay. Always has been, always will be - because what the buyer pays is based on the purchase price which doesn't exist when listed, right? The property tax office in every muncipality has an estimation tool that gives a range of the buyer's potential taxes. Insurance - if you're using real estate portals, you will always be wrong. The portals are for 'entertainment value only' - they don't consider condition, location, and other factors. That's not a bait and switch - that's reality. Lender: your lender should have given you a good faith estimate within 3 days after application that would provide you with the costs associated with the transaction; none of it should have been a surprise. You can lock your rate for a fee if you're as far out as it sounds you are from closing but until then 'you're living on the edge.' In any case, the rate is the least of your issues here.
You're not going to like the rest of this either so please put on your coat of armour. I don't think you're ready for this investment on many levels including the age of the building, hoping rents will increase and rates won't 'move' on you (they will; reality sucks), the lack of trusted and knowledgeable advisors...please discontinue using any online portal - aka 'real estate porn.' I hope you'll step back and realize that what you actually control in this transaction is very little yet you have your financial well-being riding on it.
I offer this as an investor, owner of a 1925 money pit - and I assure you that these 'historic' buildings are the gift that 'keep on taking,' and an investment Broker of a private client firm that I own. Real estate mistakes are painful and costly. I don't want that for you.
> The taxes in the MLS are not wrong...they are the current taxes that the seller is paying - not what the buyer will pay. Always has been, always will be - because what the buyer pays is based on the purchase price which doesn't exist when listed, right?

This must be a local thing. In my market the listed property tax is based on the listing price. It shows up this way also on Zillow and Redfin. It seems 1) not hard to do 2) more accurate than using the sellers property tax amount. So why would the mls use a value that they know is wrong versus one that is correct for the listing price. I would find this akin to using the sellers interest rate instead of current market rate. Granted there is a large valance in rates that buyers obtain do it will not be perfectly accurate, but it certainly can be more accurate than using the sellers interest rate.

1 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7mo
Quote from @Patricia Steiner:

Huh? I'm concerned by the lack of knowledge that you are attributing to your realtor. There's plenty of stupid here to go around. The taxes in the MLS are not wrong...they are the current taxes that the seller is paying - not what the buyer will pay. Always has been, always will be - because what the buyer pays is based on the purchase price which doesn't exist when listed, right? The property tax office in every muncipality has an estimation tool that gives a range of the buyer's potential taxes. Insurance - if you're using real estate portals, you will always be wrong. The portals are for 'entertainment value only' - they don't consider condition, location, and other factors. That's not a bait and switch - that's reality. Lender: your lender should have given you a good faith estimate within 3 days after application that would provide you with the costs associated with the transaction; none of it should have been a surprise. You can lock your rate for a fee if you're as far out as it sounds you are from closing but until then 'you're living on the edge.' In any case, the rate is the least of your issues here.
You're not going to like the rest of this either so please put on your coat of armour. I don't think you're ready for this investment on many levels including the age of the building, hoping rents will increase and rates won't 'move' on you (they will; reality sucks), the lack of trusted and knowledgeable advisors...please discontinue using any online portal - aka 'real estate porn.' I hope you'll step back and realize that what you actually control in this transaction is very little yet you have your financial well-being riding on it.
I offer this as an investor, owner of a 1925 money pit - and I assure you that these 'historic' buildings are the gift that 'keep on taking,' and an investment Broker of a private client firm that I own. Real estate mistakes are painful and costly. I don't want that for you.

Patricia, One thing about Chicago and RE agents many just write the contract hand it to an attorney ( everyone has their own attorney buyer and seller) and then they duck.. I did some deals there and the attorneys were drafting the repair addendums etc.. agents don't get involved so you can see how a busy attorney just writes matter of fact and deals are lost because you need good agents to massage these things and keep everyone calm.. Not black and White attorney speak or attorney freaking buyer or seller out.. But good post and your right a good agents should know all this and inform their buyer up front .. especially in a HIGH ridiculously HIGH property tax place like Cook county IL. And a totally dysfunctional taxing authority its insane how poor they are at their job..
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Tj FlorosPro Member

Real Estate Agent · Chicago · Member since 2025 · 95 posts · 74 votes

7mo

I wouldn't rely on what is on the MLS. Sounds like you need a better agent, one that house hacks or owns 2-4 units and knows the numbers. Insurance lowest I found is $250 a month for a house hacker up to $350 a month depends on the building how many units, conditions, etc. Taxes are always wrong, underwrite property taxes at the purchase price/sold price not what they are today because they will probably go up when its your time for a reassessment. Water/sewer/trash budget $50-75 per unit. Interest rates, I underwrite the higher tier of what is being quoted if the average is 6.3 ill underwrite 6.5-6.7 for clients and factor in PMI or I'll reach out to lenders I work with and see what rates are.

Tenants i would suggest in good practice even if they have been there for 1 year do a 90 day notice always better to be on right side of the RLTO then on the wrong. But some tenants are cool and might be willing to move out sooner or stay a little longer just depends on the tenants. I have seen some sellers do cash for keys with tenants but that is rare. Alot of sellers dont want to upset or ask tenants for anything for a buyer since its not always 100% that the deal will close and now they worked out a deal with a tenant that they no longer need or want.

Need to underwrite the deal day 1 at current taxes, rents, etc and when the property is at its highest and best use market rents, post rehab rents, higher property taxes, different insurance rates post move out etc.

If you are walking into a deal and your agent is using the low end of numbers and the current taxes with senior freeze, home owner exemption, etc, its probably a good bet that by year 2-3 its not longer cash flowing or costing you more to house hack then what you first thought.

If you have an old roof and its a flat one budget around 25k depending on the building and i would bet you will need to do some tuck-pointing as well 8-10k per parapet wall. Pitched roofs are usually cheaper.

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Henry Lazerow

Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes

7mo

@Patricia Steiner In Chicago all the time the MLS has incorrect current taxes as agents copy paste wrong or they put 2022 taxes pretending it's 2025 taxes, etc. Agents here also say buildings are legal 4 when really legal 3, you need check everything in MLS upfront to not waste time under contract with surprises. In terms of rent growth this is not Florida where supply is easily added, you buy in good Chicago neighborhoods and can expect rents to climb 3-10% a year. I own units here and have brokered over $60 million of the Chicago 2-4 units so seen may deals play out, the rent growth is what gets you rich on these buildings and what brings them to high future cash flow rates. My first house hack was $650 a unit in 2019 with some rehab got them to $1100 now in 2026 they go $1795, last year were $1650 so 8.8% up in last year.

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Peter MckernanBusiness Member

Residential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes

7mo

There are a couple things that stick out to me here in this post, first great on moving to get your first investment property (I know you have the condo, but this is the first investment).

Second, did you interview multiple agents when getting an agent? That should always be the thing to do these days as for your info, the last two years (2024/2025) National Association of Realtors have pulled data and 71% of agents did not do a deal/transaction in 2024 and the same stat came out for 2025. So, here is the thing, out of 10 agents you talk to, 3 of them did a deal, and out of that maybe one is good/OK doing investment deals (maybe). You need to be interviewing a lot!

Third, the taxes on the MLS are correct, but it is what the seller is paying and then you get what is called a supplemental tax bill (check your closing disclosure that you signed for the taxes by the lender). This stuff is correct, but what you should be doing is take the sales price and multiplying that by the tax rate in the area (example, sales price $800,000 and tax rate TODAY is 1.5% you will be paying roughly $12,000 a year in taxes).

Fourth, you need to also has a lender that knows what is going on and gives you the loan breakdown correctly (ask for a loan estimate (LE) from them prior to going into a deal with them). This will tell you closing costs (if you are getting charged points) and also the rate they have too for you.

Fifth, there is always things to negotiate, I helped a client that was buying a 4 unit, and we were in escrow got the estoppels back and realized the owner had let the tenants slide on their rent for some time. We had the seller sign a form to get the worse tenant out before close of escrow and pay that tenant to leave which happened within a weekend.

Sixth, with all this being said, you also need to make sure you are educated yourself along the way and also trusting your gut. Sounds like you are feeling that now, and realizing it is a bad deal (or not as good as it was). If that is the case, and you can pull out now without losing your EMD and that would make you sleep at night better (even with living at your In-Laws) that might be way you should go to find a better deal that you feel better about.

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Don KonipolBusiness Member

Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes

7mo

Quote from @Lauren Mattern:

It's been a rollercoaster as we look to buy our first small MF (four flat) in Chicago. This market moves fast and it seems like a few due diligence items were poorly handled on the part of us and our realtor leading up to offer and then definitely leading up to inspection. In sum, every single variable changed. We (the buyers) verified and caught everything during due diligence period (better than closing!) but the lack of strategy from the "real estate professionals" helping us is wild to me. Curveballs include: bait and switch on interest rate quoted from mortgage broker, taxes wrong in MLS (old #s), insurance quotes are 4x what the auto quotes are in all the real estate portals, and then there is a tenant timing issue. It feels like every single detail is designed to catfish buyers into getting too far into deals they feel sunk cost pressure on. The property is at a good price ($925k for a West Town four flat that's been pretty run into the ground w/ no rent increase in 20 years) but all the other variables throw off our deal math. It's highly feasible to get it to a $1.1M building with $100k of work over two years). Current deal math: we can get this thing at $6,150 monthly carrying cost (all factors including utilities except our ongoing maintenance budget) and we assume we'll need to put in 100k of work over the next 3 years (good news is not all at once, we can cash flow it). I think we can someday get in the $8ks on rent range - after a long stabilization period (and we are set to live there so not counting that period). We flagged a month ago that although the contract has a fast closing date - there are some medium-term tenants subject to longer notice on move outs. This apparently was never discussed with the seller (we assumed it had been given we mentioned it three times to no response from agent). I don't like operating in this environment of lack of communication. We are now in a period where we don't want to close until its vacant (except one tenant we have screened and trust) so pushes closing date to July 1. We already got our current condo under rental contract (at suggestion of mortgage broker, to improve residuals math) for May 1, so now I'm looking at a two month gap with a newborn - hello in-laws! I'm not mad there are twists, but they seem VERY avoidable. Next steps: I'm requesting immediate confirmation on seller willingness to close July 1 not sooner (we don't want liability of super tricky unvetted tenants) - or we close whenever its vacant if he wants to get them to agree to sooner) and if that gets a yes I think we can salvage the deal. If not, I walk.

Questions for this group:

- Anything else I'm missing I should be watching for on deal strategy?

- Any favorite Chicago small MF agents in case this deal dies and we start over w/ someone specialized?

- Any favorite insurance options we should try (8 quotes so far, lowest is 4x the MLS estimate) - owner occupy 2 flats, 2 other flats rented, 1880s building, and roof only has five years of life left (that was a no-go for two companies). Lowest quote now is $475 per month

- Methods to verify the mortgage rate without it moving on us! My trust is shaken on that... We operate super transparent across board so all the "surprise factors" are getting annoying across the deal variables - we flagged all factors earlier. I shouldn't complain - I think we can still land it at a good rate - but the constant shiftiness scares me.

- Tenants have 90 day notice period due to length of tenure - we flagged this a month ago but apparently it's news to all the agents and seller just now -eye roll. Is it common practice for seller to able to work out agreement for 30 day notice with them? E.g., I'd give back $5k in seller credit if they put it toward tenant move out/support in exchange for early departure if it sped up schedule.

Then there's of course the life discussion for a different forum: Will I be okay staying with family for two months with a newborn? :)

I’ve never seen a small property offered for sale that correctly volunteered all pertinent information. Once you’ve experienced the “promotional” packages put together for a few dozen deals you’ll begin to realize that 50% is fantasy, and the other 50% is exaggeration. Here are some of the classic bs

1.” Rents can easily be raised 25% “
2. Historical profit and loss statements that bear no resemblance to the corresponding tax returns
3. Use of pro forma statements that exclude maintenance, repairs, depreciation, admin, accounting, legal, outside vendors, payroll taxes, auto and truck expenses, and cost of labor provided by seller, his relatives, friends, and tenants, leasing costs
4. Rent rolls that do not account for rental concessions or free rent inducements
5. Replacement items (roof, HVAC, wiring, etc) that are near, at or beyond their useful life, but unaccounted for in financial information provided
6. No mention of large property tax increases, large insurance premium increases, etc.
7. Pending rent control or tenant friendly regulations
8. Not reporting the number of vandalism actions the property endures
9. Underreporting vacancy loss
10. No or low deposit to attract tenants

On another note, NOW isn’t always the right time to purchase investment property. I would argue that EVENTUALLY most property purchases will look good over 20 or 30 years no matter when or what was paid, as inflation eats away at our currency value. But not ALL property (think buying in Detroit in 1964).

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Jonathan KlemmBusiness Member

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Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes

7mo

Hey There @Lauren Mattern - You've got a ton of good advice above from some savvy Chicago invetsors. I'll just add a couple more people to connect with.

@Michael Facchini is great like @Aaron Zimmerman mentioned, but you could also try @Zack Karp or @Joshua Jones.

Other great multi-family real estate agents @Henry Lazerow (above), @Brie Schmidt, and @Jake Fugman.
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Zack KarpPro Member

Lender · Schaumburg, IL · Member since 2015 · 833 posts · 774 votes

7mo

@Jonathan Klemm thanks for the mention!

@Lauren Mattern sorry to hear you have not had a good mortgage experience. Let me know if you need anything on the mortgage financing side. Been doing this 28 years and you won't find a bad review on me anywhere, and definitely no bait and switches. I work with a lot of small MF in Chicago and investors. What you will get from me is candid transparency. Feel free to shoot me a DM if you want to connect.

Best of luck!

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Patricia Steiner

Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes

7mo

@Dan H., @Henry Lazerow

Here you go:

Chicago; National Assn. of Realtors:
Taxes listed in the Chicago MLS (Multiple Listing Service) for residential listings reflect the actual, current annual tax bill paid by the seller (or as assessed for the previous year). This amount is not based on the new list price or the future tax bill of the buyer, but on the most recent assessed value and tax rate. (End)

Nationally; source: National Assn. of Realtors

MLS listings typically reflect the seller's current taxes based on the last assessment, not the future taxes based on the new listing price. While MLS data provides the annual tax amount, these figures often reflect exemptions (like homestead) that the seller has, which will not transfer to the buyer. (End)

NAR sets the policies for the MLS. It is what it is...

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Tj FlorosPro Member
Real Estate Agent · Chicago · Member since 2025 · 95 posts · 74 votes
7mo
Quote from @Patricia Steiner:

@Dan H., @Henry Lazerow

Here you go:

Chicago; National Assn. of Realtors:
Taxes listed in the Chicago MLS (Multiple Listing Service) for residential listings reflect the actual, current annual tax bill paid by the seller (or as assessed for the previous year). This amount is not based on the new list price or the future tax bill of the buyer, but on the most recent assessed value and tax rate. (End)

Nationally; source: National Assn. of Realtors

MLS listings typically reflect the seller's current taxes based on the last assessment, not the future taxes based on the new listing price. While MLS data provides the annual tax amount, these figures often reflect exemptions (like homestead) that the seller has, which will not transfer to the buyer. (End)
NAR sets the policies for the MLS. It is what it is...

I have personally underwrote 2 deals this past week where the listing agent put the wrong property tax information into the MLS. Like others have said either 2-3 year old tax bills or just the wrong tax bill altogether like completely wrong pins. They are mistakes it happens no one is perfect. The only thing that matters for the current tax bill is making sure it does not throw off the clients DTI and approval odds.
Most good agents and lenders go straight to the treasures office and pull the actual and most current bill and remove all exemptions and thats just to get the CURRENT tax bill for a property assessed at $550k when its listed and will trade for for $950k, meaning come the next reassessment year (every 3 years) the county is going to see your building sold on the open/public market and say well the building sold for $950k so we are going to bring the property tax value to reflect the purchase price. So the taxes will probably double.
Thats when the buyer freaks out and did not underwrite that or really their agent didn't. While a good agent would have baked that new/future tax bill into the numbers and already forwarded their client a list of property tax attonerys to start the expensive yet necessary battle to keep your property tax bill lower.

Welcome to cook county IL where you pay 110% in taxes and see about 5% of that used to actual good use, that other 95%? I'm not really sure. But hey you better believe that my mayor's wife needed her first lady office remodeled for $80k! I means she's the first lady for a city which is pretty much the same thing as the first lady of the united states.... Thats just Chicago not even talking about the rest of crook county
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Richard F.

Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes

7mo

Another potential factor that must be considered when estimating annual taxes, are recent upgrades or a "flip" property that has been (supposedly) upgraded. The actual new selling price may jump up significantly from it's prior tax valuation, especially for flips, but also for very long-held properties that were bought much cheaper to begin with.

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James JonesPro Member

Investor · Collierville, TN 38017 · Member since 2017 · 734 posts · 542 votes

7mo

You are not crazy. What you are feeling is what happens when you move from browsing to actually underwriting a deal.

Let’s break this down cleanly.

First, strategy gaps you should double check.

Taxes

Do not rely on MLS or seller numbers. Pull the actual Cook County tax bill and check:

• Assessed value

• Exemptions currently applied

• Whether seller has homeowner exemption

If they do and you will not qualify the same way, your taxes will reset higher. Underwrite worst case.

Insurance

1880s building plus older roof equals pricing pain. $475 per month on a four flat in Chicago right now is not crazy, especially owner occupied with aging roof. Make sure:

• Replacement cost is realistic

• You are not underinsuring to lower premium

• Deductible is not absurd

Also confirm whether roof age is binding or estimated. If five years left is subjective, get a written roofing inspection. Insurers care about documented remaining useful life.

Interest rate

The only way to “verify” a rate is to lock it. A quote is meaningless.

Ask for:

• Formal Loan Estimate

• Lock confirmation in writing

• Expiration date of lock

If the broker is floating you verbally, that is noise. Rate locks are transactional, not conversational.

Tenant timing

If leases require 90 day notice, that is binding unless tenants voluntarily agree otherwise. Seller cannot unilaterally change it.

Common approach:

• Seller offers cash for keys

• Seller delivers property vacant as condition of closing

Your idea of increasing seller credit to fund early move out is reasonable. But do not close with problem tenants thinking you will “figure it out.” That is how small MF buyers get burned.

Now on deal math.

You said:

Carrying cost: $6,150 per month

Future rent: low $8,000s stabilized

Call it $8,200 gross someday.

At $8,200 gross, after:

• 5 percent vacancy

• 8 percent maintenance

• CapEx reserve

• Insurance and taxes fully baked

You are not swimming in margin. You are betting on long term appreciation and rent growth, not immediate cash flow.

Which is fine. But be honest with yourself.

If every variable changed during diligence, that is not a bad sign about the building. It is a bad sign about the team.

Your instinct to delay closing until vacant except vetted tenant is sound. Liability and eviction risk in Chicago is real. Do not compromise there.

If seller refuses to cooperate on vacancy timing, walking is not weakness. It is discipline.

As for the life question.

Two months with in laws and a newborn is survivable.

Buying the wrong $925k building because you felt timeline pressure is not.

Stay strategic. Not emotional. The right deal survives scrutiny. The wrong one resists clarity.

0 Reply

Michael Facchini

Lender · Chicago, IL · Member since 2017 · 438 posts · 193 votes

7mo

Lauren, sincerely sorry to hear of your challenges on this one. While a rocky road isn't necessarily an uncommon occurrence in our industry, it frankly doesn't need to go down like this. Multi-unit transactions are very much nuanced, and they can't afford any mis-steps along the way. That in mind, it really comes down to having the right team around you. A clearer and smoother path inherently comes when experienced and trustworthy agents, lenders, attorneys, and insurance brokers are involved. Many will say they know this multi-unit space, but truth is only a smaller percentage are as well-versed as advertised.

There's quite a bit to unpack on your list of concerns above - best discussed on a 15-20min phone call where you can fully dig in. Happy to grab a call with you if you like. As an avid investor myself, I like to bring my lender-hat into the conversation, but also my investor-cap to hit topics from that angle as well. Either way, I'm confident you can get this one back on track if you have the right people involved.

2 Reply

Patricia Steiner

Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes

7mo

As I referenced in my post, the MLS reported Taxes are what the seller is currently paying - not what the buyer will pay - soooo it's garbage/meaningless data. It should not ever be used to vet a deal. If I ruled the MLS, I would just delete the dang number altogether - but I don't - and even more so, I do not want to be the poster child for MLS stated Taxes or anything else on it. What every realtor/broker needs to know is that the number is garbage - and you MUST go the tax office estimator to determine the buyer's potential obligation; it will be substantially higher - always is, always vulgar. What I want every investor to know, and I am one as well, is this: "let the buyer beware." In Florida, that is the real estate division's MO. It's stated/it's posted, they're not embarrassed by it. The buyer has the obligation to vet. The buyer chooses their trusted advisors to include realtor and lender. Choosing those professionals is as important as choosing the right property.

And, I'm happy that Florida is ranked several slots below Illnois in property taxes yet still in the vulgar range - but we have our own #1 rankieng: Property Insurance. No one gets out unscathed.

Bottom line: Taxes matter; they CAN kill a deal fast. Trust only you. Vet with the source - the Property Valuation Office. There are online estimator tools there. The MLS is a marketing tool.

I'm moving on...best.

0 Reply

John Warren

Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes

7mo

@Lauren Mattern I almost never see sellers that are willing to give notices to tenants. This is even more the case when there is a "good deal" on the table. Most older and tired sellers do not want to give notices, create waves or do much. They want to exit. This is where a new buyer can jump in and do well over time.

Insurance has been challenging for all buildings in the Chicago area the last few years, but I wouldn't let that stop you if the numbers work.

For your tenant notice period, I believe you actually would need 120 day notices. Your real estate attorney can and should be the one to instruct you on that, but generally speaking in Chicago we do 60 day notices or 120 day notices.

Ultimately, if you can swing a good, solid 4 flat then you do it!

0 Reply

Twannisha Jackson

Rental Property Investor · Cleves · Member since 2023 · 132 posts · 82 votes

7mo

hi, I stopped reading after “curveball”, honey run. red flags! unless you got $30 million or a pool of investors, good luck. you need an attorney, let THAT be the professional for you. ask some property managements in the area about that specific address. i’m conservative so i’d have to past, I don’t want complications before I even get started. who knows what’s on the other side? that’s just me tho.

0 Reply

Nicholas Cokas

Member since 2021 · 82 posts · 79 votes

7mo

Lauren — 23 replies and everyone told you to find a better lender or agent. That's fine, but nobody stacked all the corrections together to show you what this deal actually looks like. Let me do that.

Your real carrying cost isn't $6,150/month. You built your numbers off the MLS tax figure and portal insurance estimates. Here's what actually happens when you close on a $925K four-flat in Chicago:

Cook County reassesses at purchase price. Your property taxes are jumping to roughly $18,500-22,000/year ($1,540-1,830/month) depending on the assessor's equalization factor. Patricia and TJ both flagged this but nobody gave you the number. That's potentially $400-600/month MORE than you budgeted.

Insurance on an 1880s building with knob-and-tube risk, original plumbing, and balloon framing runs $4,800-6,500/year in Chicago right now — the $475/month quote you got is actually realistic, not inflated. Carriers are pricing 1880s masonry differently post-2024 because claim frequency on pre-1920 buildings runs 2.3x modern construction. You can bring this down by getting a 4-point inspection (roof, electrical, plumbing, HVAC) done BEFORE closing and submitting it with your application — some carriers will knock 15-20% off if you can prove updated electrical and copper/PEX plumbing.

Corrected Stack

Item	Your Estimate	Realistic
Mortgage P&I	~$4,800	$4,800-5,200 (rate was misquoted — get this locked NOW)
Property tax	~$800?	$1,540-1,830
Insurance	~$120?	$400-475
Maintenance reserve (1880s = 15% not 10%)	?	$1,200
Vacancy (5%)	?	$400
Total monthly carry	$6,150	$8,340-9,105

Against $8,000/month stabilized rent, you're negative $340-1,100/month BEFORE your $100K rehab. You're subsidizing this building from your W-2 for the first 2-3 years minimum.

That doesn't necessarily mean walk away. West Town four-flats are appreciating at 5-7% annually, and Henry's rent growth data (8.8% annualized) is real — Chicago rents are running hard. In 3-5 years this building could gross $10-11K/month and your fixed-rate mortgage stays flat. The question is whether you can stomach negative cash flow with a newborn while doing $100K in rolling rehab.

The Tenant Situation Is Your Actual Emergency

Chicago's RLTO requires 60 days written notice for lease non-renewal (120 days for buildings with 4+ units if the tenant has lived there 3+ years). You said you flagged one tenant a month ago — if you didn't deliver written notice in the RLTO-compliant format, that clock hasn't started. A bad tenant in a Chicago four-flat takes 4-8 months to remove through eviction court. If you close with a problem tenant, you're carrying that unit at below-market rent (or zero rent during eviction) while paying your corrected $8,500+/month nut. Get your attorney to verify tenant notice compliance BEFORE you close, not after.

Two Things to Do Before You Make a Decision

1. Get the rate locked in writing today. Not verbal, not "we'll get you around X." Written lock confirmation with expiration date. If your broker can't produce this, switch lenders immediately — Michael Facchini and Zack Karp both offered in this thread, take one of them up on it.

2. Run the deal at the corrected numbers above and ask yourself: can I cover $500-1,000/month negative cash flow for 24-36 months while doing renovations with a newborn? If yes, West Town is a strong long-term bet and you'll be glad you bought it in 2028. If no, you haven't lost anything by walking — your earnest money and inspection costs are cheaper than 3 years of subsidizing a building that isn't ready to cash-flow.

One Thing Nobody Mentioned

Set up an Illinois LLC or land trust before closing. Four-unit building in Chicago = slip-and-fall liability magnet. An LLC with a registered agent costs $250/year and separates this asset from your personal finances. Your lender may require you to close in your personal name (most do), but you can transfer into the LLC immediately after closing — just confirm with your lender that this won't trigger the due-on-sale clause. Most portfolio and agency loans allow entity transfers with written notice. . Created with my own analyis tool..... Cheers

1 Reply

Spence W.

Investor · Member since 2026 · 38 posts · 40 votes

7mo

That $475 monthly insurance quote is absolutely realistic for an 1880s masonry building. I track carrier availability tightly. State Farm and Allstate recently stopped writing new policies entirely across twelve different Kansas City zip codes. Older roofs kill coverage. The thing is, your cash flow model breaks the second you're forced into a high-risk insurance tier.

Don't assume those medium-term tenants will leave quietly. When I evaluated properties in Indianapolis, I pulled the Marion County court eviction records. The data showed tenant holdovers were drastically higher than advertised. Search their names in the Cook County docket to see if they have a history of fighting lease terminations.

0 Reply

Josh C.Pro Member

Property Manager · Indianapolis, IN · Member since 2010 · 1k+ posts · 1k+ votes

7mo

@Spence W.

What do you mean when you say tenant holdovers are drastically higher than advertised in Indianapolis?

We evict people all the time. Nothing has changed in 10 years. Judge gives the 7-14 days to move out every time.

What data are you pulling that shows how long they stay post eviction? Didn’t know that would be public, is that what you mean?

Filing to court date times have actually gotten faster in the last few years so that can’t be what you mean.

0 Reply

Spence W.
Investor · Member since 2026 · 38 posts · 40 votes
7mo
Quote from @Josh C.:

@Spence W.
What do you mean when you say tenant holdovers are drastically higher than advertised in Indianapolis?
We evict people all the time. Nothing has changed in 10 years. Judge gives the 7-14 days to move out every time.
What data are you pulling that shows how long they stay post eviction? Didn’t know that would be public, is that what you mean?
Filing to court date times have actually gotten faster in the last few years so that can’t be what you mean.
Yeah fair point, filing to court date has gotten better for sure. What I was looking at is the total time from notice to when the unit is actually empty and rentable. I pulled Marion County eviction filings and tracked how long cases took from initial filing to case disposition, and a lot of them drag out way longer than the 7-14 days you'd expect after judgment. Tenants requesting continuances, filing appeals, that kind of stuff.

For local landlords who can show up to court and manage it hands on it's probably fine, but if you're investing from out of state that extra vacancy time hits different on your cash flow projections.
0 Reply

Josh C.Pro Member

Property Manager · Indianapolis, IN · Member since 2010 · 1k+ posts · 1k+ votes

7mo

@Spence W.

How are you tracking when the unit is vacant? I wasn’t aware that was publicly posted. Very curious where you would find that.

We have evicted literally hundreds of people in the last 10 years. Probably twice has someone gotten more than 14 days. A large percentage of our clients are out of state investors and that is the case for them. (Side note: anyone evicting a person and not showing up for court is very unwise) Mind sharing specifics on the location data you are tracking?

So much nuance exists, and almost none of that is on the internet for AI to learn from. If the goal is to eliminate 100% of risk, real estate investing isn’t the vehicle.

0 Reply

Jarret Jarvis

Real Estate Agent · Chicago · Member since 2021 · 170 posts · 64 votes

7mo

Lauren, you’ve done more real due diligence here than most first‑time small‑MF buyers ever do. The fact that you caught all of this before closing is a win, even if it doesn’t feel like it.

A few thoughts, rapid‑fire:

You’re right to insist on aligning closing with vacancy. With Chicago notice rules and long‑term tenants, you’re inheriting years of history and risk; if you don’t like the tenant profile or timing, that’s a core deal‑term, not a detail.
Rate "bait and switch," MLS tax errors, and fantasy insurance numbers are exactly why your buy box should be based on your numbers only, your actual lender worksheet, your insurance quotes, your taxes, your CapEx, not portal/MLS placeholders.
On notice periods and buyouts: yes, it’s common for sellers to negotiate early move‑outs with cash and to memorialize that in writing (and sometimes escrow) tied to closing. Whether it’s 30 vs 90 days is a business decision, but it should be surfaced and negotiated early, not treated as a surprise.
Your walk‑if‑no‑July‑1 (or vacancy‑linked) closing boundary is healthy. If the whole deal only works when everyone else is “perfect” and transparent…that’s not a real pro‑forma, that’s hope.

On your questions:

Strategy: you’re already doing the important thing, forcing everything into writing: closing tied to vacancy, rate lock terms, insurance assumptions, notice timelines. If something can blow up the deal, it belongs in the contract or an amendment.
Agents: I’d absolutely switch to someone who lives in the small‑MF/house‑hack world and treats tenant law, taxes, insurance, and lender structuring as front‑end issues, not afterthoughts.
Insurance: an 1880s four‑flat with short roof life and owner‑occ is inherently going to price differently than a "portal estimate." I'd keep shopping but also accept that your underwriting should use the current real quote, not the MLS dream.
Rate verification: get a written cost‑of‑funds breakdown and a clear explanation of what’s actually locked (product, term, rate, costs) and what’s still floating. If they won’t spell it out in an email and a lock confirmation, they don’t deserve this deal.
Tenant notice/buyouts: totally reasonable to propose a structure like, “We’ll close at X with Y credit contingent on you delivering Units A/B vacant by Date Z via written agreements with tenants.” If the seller wants your price, they can help solve your risk.

Honestly, your bar is not too high. You’re buying a nearly seven‑figure 1880s four‑flat with a newborn in the mix, you’re allowed to demand adult supervision from the pros.

If this one salvages on your terms, great. If it dies, I’d be happy to help you think through a tighter game plan for Deal #2 (questions to ask agents/lenders upfront, how to structure your offer around notice periods, and a underwriting template that bakes in “Chicago reality” from day one). If you want that, reply and I’ll outline the exact checklist I’d use in your shoes.

0 Reply

Mid-Deal Regrets on a Small MF in Chicago

Mid-Deal Regrets on a Small MF in Chicago

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Corrected Stack

The Tenant Situation Is Your Actual Emergency

Two Things to Do Before You Make a Decision

One Thing Nobody Mentioned