The listing sheet on a brick two-flat in Avondale said taxes were about $7,000 a year. My client loved that number. I didn't. The seller was in their seventies and had lived on the first floor since the nineties, and that bill had every exemption Cook County offers built into it.
This is the trap I see investors fall into most in Chicago. They underwrite the deal on the seller's tax bill instead of their own.
Here's how it happens. A longtime owner-occupant can carry a homeowner exemption, a senior exemption, and a senior freeze that holds the assessed value at an old number. When you close, those go away. If you're not living in the building, you don't get the homeowner exemption back either. Sometimes the bill doubles. I've seen it get close to tripling.
Run it on a building at around $850,000. Say the two units rent for roughly $2,800 and $2,600, which matches what I've seen west of Kedzie this year. That's about $64,800 a year gross. With a $7,000 tax bill, the building looks like a cash-flowing gem. With a realistic $16,000 to $18,000, you're down $800 to $900 a month. That's before insurance, and before the boiler that's older than your car.
Then there's timing. The city gets reassessed every three years. The last round was 2024 and the next is 2027. Prices in Avondale and Logan Square have climbed fast enough that the assessor will notice. If you buy now, the next reassessment is coming whether you budgeted for it or not.
My opinion, and plenty of investors won't like it: if a deal only works at the seller's tax bill, it doesn't work. Walk away. There's another two-flat two blocks over, and the seller's grandkids will tell you it's "basically turnkey."
I've run brokerages in San Diego and Chicago and managed agents for twenty years. The best ones I've worked with pull the full tax history and the exemption breakdown before the first showing. The rest find out at the inspection, or worse, when the second-installment bill shows up.
Before you write an offer, ask your agent one question: what will my tax bill be? If they just read you the number off the listing, that tells you something about the agent too.