Chicago has the visitor demand any host would want: conventions at McCormick Place, Cubs and Sox games, Lollapalooza, the lakefront and world-class hospitals. What it does not have is an easy path for investors. The city's rules make a non-owner-occupied nightly rental difficult in most buildings, so most investors who want STR income look outside the city.
In short: LendingStreet finances short-term rentals with DSCR loans that, on some programs, qualify on projected short-term rental revenue instead of a long-term lease, with no W-2s or tax returns and LLC borrowers allowed. Loans start at $150,000 and purchases go up to 80% LTV, often lower for STRs depending on the program. In the City of Chicago, investor-owned nightly rentals are tightly limited, so we most often see Chicago investors financing STRs in Illinois leisure markets such as Galena, the Starved Rock area and the Chain O'Lakes, and financing their city properties as long-term rentals.
Chicago regulates short-term rentals through its shared housing and vacation rental rules, enforced by the Department of Business Affairs and Consumer Protection. In general, a shared housing unit must be the host's primary residence, many condo and apartment buildings appear on the city's prohibited buildings list, and residents of some precincts have voted to restrict new short-term rentals. A separate vacation rental license has its own zoning and building requirements.
Put plainly, buying a two-flat or condo in the city to run as a nightly rental without living there rarely works. Our investor loans are business-purpose loans on non-owner-occupied property, so the owner-occupied path does not apply either. If you are set on a city property, plan on long-term leases or furnished stays of 30 days or more, and confirm what any condo association allows.
The good news is that several Illinois leisure markets are within a few hours of the city, with strong weekend and summer demand from Chicago itself. Each has its own county, city and HOA rules, so the table is a starting list for research, not a list of approvals.
| Market | Distance from Chicago | What draws guests | What to confirm |
|---|---|---|---|
| Galena and the Galena Territory | About 3 hours | Historic downtown, wineries, Chestnut Mountain skiing | City or county rules, Territory association rules |
| Starved Rock area (Utica, Ottawa) | About 1.5 hours | State park trails, canyons, Illinois River | LaSalle County and city permits |
| Chain O'Lakes (Fox Lake, Antioch) | About 1 hour | Boating, fishing, summer weekends | Village rules, flood zones, piers |
| Lake Geneva, Wisconsin | About 1.5 hours | Lake, resorts, weekend getaways | Wisconsin and local rules |
| Southwest Michigan shoreline | About 1.5 to 2.5 hours | Lake Michigan beaches, small towns | Michigan township and city ordinances |
Short stays in Chicago carry several layers of tax: the Illinois Hotel Operators' Occupation Tax, the city's hotel accommodations tax with an added surcharge on shared housing and vacation rentals, and Cook County's hotel accommodations tax. Outside the city, the state tax still applies and counties and municipalities may add their own. Platforms collect some of these but not always all.
Wherever you buy, register with the city, village or county if required, confirm which taxes the platform remits, and keep records for the rest. A local tax professional can confirm the details for your property.
Leisure markets near Chicago are driven by Chicago weekends. Summer is strong at the lakes and the Michigan and Wisconsin shorelines, fall color and harvest weekends lift Galena and Starved Rock, and winter is slow nearly everywhere except ski weekends at Chestnut Mountain. Weekdays outside summer can be quiet.
A sound projection uses a full year of comparable listings, and your own budget should assume slow January through March. If a property only works on summer weekend pricing, it is a weaker candidate for an STR loan.
On some programs, we qualify the property on a third-party projection of short-term revenue rather than a 12-month lease. The program converts that projection into a monthly qualifying income and compares it with the full payment: principal, interest, taxes, insurance and any association dues.
If the projection comes in lower than you hoped, our guide to STR loans with a low AirDNA projection explains the options. If you already own and operate an STR, an STR DSCR refinance can use the property's actual booking history.
This example is illustrative and not a quote. A Chicago investor buys a three-bedroom home near Galena for $395,000, in an area where local rules and covenants allow nightly rentals. A third-party projection estimates about $62,000 a year in gross bookings, and the program counts $3,300 a month as qualifying income.
At 75% LTV the loan is $296,250. Estimated principal and interest on a 30-year term is about $2,046. Illinois property taxes are high, budgeted here at $640 a month, and insurance at $185, for a total payment of about $2,871. DSCR is about 1.15x.
| Item | Amount |
|---|---|
| Purchase price | $395,000 |
| Loan amount (75% LTV) | $296,250 |
| Estimated principal and interest | $2,046 |
| Property taxes | $640 |
| Insurance | $185 |
| Total monthly payment | $2,871 |
| Qualifying monthly income | $3,300 |
| DSCR | About 1.15x |
Illinois has some of the highest property taxes in the country, and investors do not receive the homeowner exemptions available to owner-occupants. Outside Cook County, residential property is assessed at one-third of market value, with reassessments on a four-year cycle in most counties. On a leisure property, taxes can easily be the largest line after principal and interest.
Use the actual tax bill for the property and ask whether any exemptions shown will come off after the sale. Lake and river properties may also require flood insurance, which belongs in the payment too.
If you own or want to buy in Chicago itself, a standard DSCR loan on a long-term lease is usually the right fit. Two-flats, three-flats and condos in neighborhoods with strong rental demand can qualify on their lease rent, and our Chicago DSCR and 2-4 unit pages cover those details. Some investors pair a city portfolio of long-term rentals with one or two leisure STRs outside the city.
Send the address, price, revenue projection and target leverage through the form below, or call (877) 298-1001. We will confirm whether the property can qualify on projected revenue, run the ratio at a few loan amounts and list what the file needs, including permits and association rules.
In most cases, no. Chicago generally requires shared housing units to be the host's primary residence, and many buildings and some precincts restrict short-term rentals. Confirm with the city before buying.
Common choices in Illinois include Galena, the Starved Rock area and the Chain O'Lakes. Lake Geneva and southwest Michigan are nearby but follow their own state and local rules.
Yes, on some programs. We can use a third-party projection of short-term revenue for the property.
State hotel tax, the city's hotel accommodations tax and shared housing surcharge, and Cook County's hotel tax. Outside the city, local taxes vary.
Stays of 30 days or more are generally treated differently from nightly rentals, but condo rules and leases still apply. We can underwrite those properties on their rental income where the program allows.
DSCR loans start at $150,000 with no stated maximum.
No. Our investor loans are business-purpose loans on non-owner-occupied property.
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