Chicago rents are holding but every refinance conversation I have starts at the same wall
Cook County property taxes reset after a sale, and in Chicago that number can move enough to reshape your operating margin before you have touched a single unit. A 48-unit building in Logan Square bought at a 5.8 cap looks different at reassessment if the prior owner held for twelve years at a low basis, because the assessor will use the sale price, not the seller's basis, to anchor the new bill. The assumption doing the most work in any Chicago pro forma right now is the year-three tax line, not the current one. Buyers who model forward using the in-place tax figure are understating expenses by anywhere from 15 to 40 percent depending on how long the seller held and what the last triennial showed. On a 48-unit building with a $900k tax bill today, a 30 percent reset adds $270k annually to expenses, which at a 6 cap is roughly $4.5 million off what that building is worth to a buyer who modeled it correctly. The rent story in Chicago is actually reasonable right now, absorption in the near north and northwest sides has stayed steadier than people expected, but that tax exposure is why deals are dying in due diligence rather than at LOI. The fix is simple to say and slow to execute: get the assessor's appeal history, pull the most recent triennial notice, and model two tax scenarios, one at current and one at a full reassessment off the contract price, before the spread even goes to a lender. What does your current pro forma use for the year-three tax line, and is it based on the seller's bill or an assessed value projection off your purchase price?
