Buying in a 2 to 4 Unit Chicago Condo Building? Read This First

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Many of Chicago's most desirable neighborhoods—including Lincoln Park, Lakeview, Roscoe Village, North Center, West Town, Wicker Park, Logan Square, Avondale, Lincoln Square, and Andersonville—are filled with two-, three-, and four-unit condominium buildings.

These smaller associations often offer lower monthly assessments, more privacy, and a neighborhood feel that many buyers love. However, under today's lending guidelines, buyers should take a closer look at how the association is managed before making an offer.

Ask These Questions Before You Buy

Does the association have reserve savings?A reserve account helps cover major expenses such as roof replacements, masonry repairs, porches, and tuckpointing. Buildings with little or no savings may be more likely to require future special assessments.

Are monthly assessments keeping up with expenses?Very low HOA dues may sound appealing, but they can also indicate that the association isn't setting aside enough money for future maintenance.

Is the association financially organized?Lenders may request documents such as:

• Annual budget

• Current reserve balance

• Insurance certificate

• Information on any special assessments

• Recent meeting minutes

• Reserve study (if available)

Having these documents readily available can help prevent financing delays.

Are all owners current on their assessments?If multiple owners are behind on dues, it can create financial strain for a small association and may raise additional questions during underwriting.

Are there any major repairs planned?Ask whether the building expects to replace the roof, repair masonry, rebuild porches, or complete other significant projects in the near future.

Good News for Buyers

Small condominium buildings are not becoming difficult to finance simply because they have fewer units. In fact, many 2- to 4-unit associations continue to qualify for conventional financing without issue.

The difference is that lenders are placing greater emphasis on the association's financial health and documentation than in years past.

A well-managed three-unit building with healthy reserves, adequate insurance, and organized financial records may present fewer underwriting concerns than a much larger association that has deferred maintenance or inadequate reserve funding.

A Realtor's Tip

Before submitting an offer, ask your Realtor to request the association's budget, reserve information, insurance certificate, and any planned capital improvements. Reviewing these items early can uncover potential financing issues before they delay—or derail—your purchase.