Chicago's investor market is built on two-flats, three-flats and greystones. They are bought, renovated with short-term money and then refinanced, and the refinance is where Cook County's tax system and the city's landlord rules matter most.
In short: LendingStreet refinances Chicago-area rentals out of hard money, bridge and existing loans with 30-year DSCR loans that qualify on the combined rent of all units. Loans start at $150,000, rate-and-term reaches 80% LTV on some programs and the standard minimum DSCR is 1.0x. In Chicago, Cook County reassessments can move the tax line sharply, and investor buildings fall under the city's Residential Landlord and Tenant Ordinance.
Logan Square, Avondale, Albany Park, Portage Park, Humboldt Park, Pilsen, Bridgeport and Rogers Park have deep stocks of two- and three-flats. On the South Side, Chatham, South Shore, Bronzeville and Back of the Yards offer lower prices and strong rent-to-price ratios.
In the suburbs, Berwyn, Cicero, Oak Park, Evanston, Elgin, Aurora, Joliet and Waukegan have two-flats, small buildings and single-family rentals. Each municipality has its own rental rules, which is worth checking before refinancing.
Older Chicago two-flats often have separate heating systems for each unit, which lets tenants pay their own heat and improves the ratio.
| Area | Typical rental stock | What to check before you refinance |
|---|---|---|
| Logan Square, Avondale, Albany Park | Two- and three-flats, greystones | Higher values, tax reassessment |
| Pilsen, Bridgeport, Back of the Yards | Two-flats and frame cottages | Unit legality, garden units |
| Chatham, South Shore, Bronzeville | Two-flats, bungalows, small buildings | Cook County tax bill, insurance |
| Berwyn, Cicero, Elgin, Aurora | Two-flats and single-family | Municipal rental licensing |
A rate-and-term refinance replaces the short-term note with a 30-year DSCR loan sized to pay off the existing balance and closing costs. The new loan qualifies on the property's rent, not your W-2s or tax returns, and the standard minimum DSCR is 1.0x. On some programs rate-and-term goes up to 80% LTV.
Chicago appraisers and underwriters look closely at garden and basement units. If the building has a garden unit, show that it is legal and permitted, or the rent may not count.
Chicago lenders and title companies will also check for unpaid water bills, open building violations and any demolition or vacant building registrations. Clear those before you apply so the payoff and closing stay on schedule.
This example is illustrative and not a quote. An investor renovated an Avondale two-flat with a hard money loan. Both units lease for $2,300 each, and the building appraises at $620,000. The payoff is $440,000.
The new loan of $451,000 covers the $440,000 payoff plus $11,000 in closing costs, about 73% of the $620,000 value. Estimated principal and interest on a 30-year term is about $3,115. With taxes of $950 and insurance of $210 a month, the full payment is about $4,275 and DSCR is about 1.08x on $4,600 of rent.
Cook County taxes are the largest cost after principal and interest, so a reassessment year can shift the ratio.
What changes most is the structure: the balloon or maturity date goes away, the payment includes principal so the balance falls each month, and taxes and insurance are counted up front. Run your own numbers with the DSCR calculator before you apply.
| Item | Before: hard money note | After: DSCR rate-and-term |
|---|---|---|
| Loan balance | $440,000 | $451,000 |
| Monthly principal and interest | $4,217 (interest only) | $3,115 |
| Taxes, insurance | $1,160 | $1,160 |
| Total monthly payment | $5,377 | $4,275 |
| DSCR at $4,600 rent | About 0.86x | About 1.08x |
| Term | Short-term, due soon | 30 years |
Cook County assesses residential property at a 10% assessment ratio, then applies a state equalizer and local tax rates. The county reassesses each region every three years, with the city, the north suburbs and the south suburbs on different years. A reassessment can raise a bill significantly.
Owner-occupant exemptions do not apply to investor buildings. Budget on the full bill, and remember Cook County bills are paid in two installments, with the second often based on the new assessment. Chicago's transfer tax applies to sales, not refinances.
Chicago's Residential Landlord and Tenant Ordinance governs security deposits, notices and repairs. Owner-occupied buildings with six or fewer units are exempt, but investor buildings are covered. Deposit mistakes can be costly, so follow it closely.
Chicago requires shared housing and vacation rentals to be registered or licensed, and some buildings are on a prohibited list. Most refinances use 12-month leases.
Two- to four-flats qualify on combined rent. Courtyard and walk-up buildings with five to eight units are residential for DSCR purposes, though max LTV varies by program.
Many Chicago investors own several two-flats across different neighborhoods. Once you have five or more investment properties, a blanket portfolio loan can refinance them together with one closing and one payment, qualified on portfolio cash flow, with release provisions if you sell a building later.
The choice comes down to the goal. If you want to replace a short-term note or an expensive loan and keep the balance about where it is, use rate-and-term. If you want equity out to fund the next purchase, cash-out reaches 75% LTV, with seasoning that varies by program.
Chicago investors who bought after a reassessment may have little room for cash-out. Rate-and-term keeps the payment lower if taxes rise again.
Send these with your request and the financing team can size the loan on the first pass.
LendingStreet is an investment property financing company. Our investor loans are business-purpose loans on non-owner-occupied property, and we refinance 1-8 unit rentals across Cook, DuPage, Lake, Will and Kane counties. Send the address, the payoff, the rent and the value you expect, or call (877) 298-1001. The financing team will run the ratio at a few loan amounts and come back with options. For statewide rules, see our Illinois rate-and-term refinance page.
Reassessments happen every three years by region, and the second installment often reflects the new value.
If you do not live there, yes. Owner-occupied buildings with six or fewer units are exempt.
If it is legal and permitted. Bring the zoning or permit record.
Yes. We refinance 1-8 unit rentals in Cook and the collar counties.
Up to 80% LTV on some programs. Max LTV can be lower on 5-8 unit properties and larger balances, so it varies by program.
No. Our investor loans are business-purpose loans on non-owner-occupied property, so the home must be a rental, not your residence.
DSCR loans start at $150,000 with no stated maximum. Larger balances get more review and can carry lower leverage.
If you own five or more investment properties, a blanket portfolio loan can combine them under one loan with one closing and one payment, qualified on portfolio cash flow.
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