Thinking about a two- to four-unit in West Town but not sure where to start? You’re not alone. Between zoning rules, financing choices, and rehab costs, small multifamily can feel complex. This guide breaks it down into a practical playbook so you can move from scrolling listings to closing on the right building with confidence. Let’s dive in.
Why West Town suits 2–4 unit investing
West Town sits just northwest of downtown and includes familiar micro-neighborhoods like Wicker Park, Ukrainian Village, Noble Square, River West, and East Humboldt Park. Demand is driven by transit access, walkable amenities, and proximity to jobs.
Demand drivers to know
- Transit access: CTA Blue Line stations like Division offer direct trips to the Loop and O’Hare, which supports steady renter demand.
- Lifestyle and convenience: Dining, neighborhood retail, and bike-friendly streets near The 606 attract long-term renters and owner-occupants alike.
- Inventory dynamics: Two- and three-flats trade at a premium, with prices and rents varying block to block based on condition, finishes, and proximity to transit.
Know the rules before you buy
Understanding Chicago-specific rules up front protects your NOI and your timeline.
Unit legality and zoning
- Confirm the legal unit count. Order or review the City’s records and, as needed, request a Chicago zoning certificate to verify permitted dwelling units.
- Review zoning overlays. Policies tied to transit and density, such as Connected Communities and TOD rules, can affect adding units, deconversions, and parking.
Landlord-tenant and healthy homes
- Chicago’s RLTO sets rules for leases, deposits, notices, and repairs. Read the City’s summary of the Residential Landlord and Tenant Ordinance and bake compliance into your plan.
- Most West Town buildings predate 1978. Follow federal lead-paint disclosure and consider testing and remediation per lead-paint disclosure requirements.
Short-term rental and licensing
- If you’re considering Airbnb or similar, review Chicago shared housing and short-term rental registration. Owner-occupancy and listing limits often apply in 2–4 unit buildings.
Transfer taxes and property taxes
- Budget the Chicago real property transfer tax into your closing costs.
- Cook County assessments can rise and impact holding costs. Underwrite conservatively and check current PIN-level tax history during due diligence.
Build your financing plan
You have more options than you might think, especially if you plan to occupy one unit.
- Conventional owner-occupied loans: Many buyers use standard conforming or portfolio loans for 2–4 unit properties when they live in one unit. Review Fannie Mae occupancy rules for 2–4 unit loans.
- FHA options: FHA insures 2–4 unit loans for owner-occupants and offers renovation products like 203(k). Check the current FHA loan limits for 2025 for two-, three-, and four-unit properties in Cook County.
- Lender expectations: Expect reserves, documentation of rental income, and in some cases self-sufficiency tests. Plan timelines around appraisals that require unit-by-unit rent and occupancy detail.
Underwrite with conservative assumptions
Build your model around what the property can reliably deliver, not best-case rent upside.
- Vacancy: 5–8% is a reasonable starting point for small city multifamily.
- Operating expenses: For older Chicago 2–4 flats, a 35–50% operating expense ratio is common per industry guidance on operating expenses. Separate capital reserves of $300–$800 per unit annually, more for pre-war buildings.
- Rents: Underwrite based on verified leases and nearby, like-kind comps. Adjust for unit size, finishes, and proximity to transit.
A practical acquisition playbook
Follow these steps to protect your contract timeline and your return.
Pre-offer checklist
- Confirm legal unit count and current zoning. If needed, obtain a zoning certificate to verify use.
- Pull 2–4 unit comps by micro-neighborhood. Focus on price per door, condition, parking, and finished basements.
- Verify rents and leases. Request the rent roll, lease copies, security deposit history, and any tenant service agreements.
- Build a preliminary budget. Flag roof, masonry, mechanicals, electrical capacity, plumbing, and life-safety devices.
Offer terms and contingencies
Include contingencies for inspection, zoning/unit verification, clean title, financial review, and financing. Be explicit about deal-breakers like illegal units or open violations.
Title, survey, and taxes
Order title and municipal lien searches. Confirm PINs, lot lines, and any recorded easements. Review tax history and expected reassessment after sale.
Permits and open violations
Search City records for past permits and open violations. Confirm smoke and CO detector compliance and permitted status for major work. Bring any flagged items into inspection negotiations.
Special items in West Town
- Lead safety: Require proper disclosures and plan for mitigation if hazards are confirmed, per lead-paint guidance.
- Short-term rentals: Validate eligibility and owner-occupancy rules through Chicago’s shared housing program before you underwrite STR income.
Pre-close actions
- Get written bids from local contractors for immediate repairs and any value-add scope.
- Confirm lender reserve and escrow requirements for operating and capital needs.
Rehab and operations: what to expect
Set realistic scopes and timelines and keep your finishes aligned with rent goals.
- Cost ranges: A simple interior refresh can run a few thousand per unit, mid-level kitchen and bath upgrades can run significantly more, and full gut or basement work can scale up quickly. Always get itemized local bids and include permit costs.
- Quick rehab checklist: roof and masonry, drainage, boilers or furnaces, hot water systems, electrical service and panels, plumbing risers and any lead service lines, kitchens and baths to market standard, entry security, and life-safety devices.
- Operations: Standardize vendor schedules for cleaning, snow, landscaping, and common-area maintenance. Track turns and maintenance in writing to protect cash flow.
Strategies that work here
- House-hack: Live in one unit and rent the others to offset your payment. Pair with conventional or FHA financing if you meet occupancy rules.
- Value-add to refinance: Improve unit finishes, stabilize rents, and explore a refi once NOI supports it. Model lender seasoning and cash-out rules.
- Long-term hold or 1031: If your plan is cash flow and appreciation, stress-test taxes and insurance. If you plan to roll gains, educate yourself on exchange timelines early.
Partner with a local advisor
If you want a building that performs from day one, the details matter: micro-location, legal unit count, realistic rents, and a scoped rehab plan. Our team pairs neighborhood expertise with an investor’s mindset so you can buy with clarity, not guesswork. Ready to map your strategy for a West Town two- to four-flat? Connect with Niko Apostal.
FAQs
What makes West Town attractive for a 2–4 unit purchase?
- Transit, walkable amenities, and close-in location support steady renter demand, while varied micro-neighborhoods let you match price point to strategy.
How do I verify the legal unit count in Chicago?
- Request City records and, if needed, a zoning certificate to confirm permitted dwelling units and avoid counting nonconforming units as income.
Which financing options work if I live in one unit?
- Owner-occupied conventional and FHA loans are common; confirm occupancy, reserves, and any self-sufficiency tests with your lender.
What operating assumptions should I use to underwrite?
- Start with 5–8% vacancy, a 35–50% operating expense ratio for older buildings, and add capital reserves of $300–$800 per unit annually.
Can I Airbnb a unit in a 2–4 flat in West Town?
- It depends on eligibility and registration rules, including owner-occupancy limits; confirm details with the City’s shared housing program before underwriting STR income.