You can sell a Chicago two-flat or three-flat with tenants living in it. The leases stay in place, the security deposits move to the buyer, and you follow the city’s Residential Landlord and Tenant Ordinance (RLTO) on notice and access along the way. The bigger decision is who you sell to: an owner-occupant who will live in one unit, an investor, or a cash buyer who takes the building exactly as it is.
The short answer
Tenants don’t stop a sale. Gather the rent roll, leases and deposit records, decide if units will be occupied or vacant at closing, and give tenants proper notice for showings and any nonrenewal. Owner-occupant buyers using low-down-payment loans often pay the most for an updated building with a unit they can move into. Investors and cash buyers will buy with tenants in place, including below-market rents and units that need work.
Should you list your two-flat or sell it to an investor?
| List with an agent | Sell to an investor or cash buyer | |
|---|---|---|
| Who buys | Owner-occupants and some investors | Investors buying for the rents |
| Tenants | Showings in occupied units; the buyer may want a unit empty | Usually bought with leases in place |
| Condition | Lenders and appraisers look closely at every unit | Bought as-is, priced for condition |
| Price | Top price for updated buildings | Below retail, based on rents and repairs |
| Timing | Market time plus loan approval | Can close in weeks |
| Costs | Commission plus seller closing costs | Varies by buyer; with us, no commission and we pay normal closing costs |
A building with long-term tenants paying below-market rent, an aging boiler or a garden unit that may not be legal tends to draw fewer financed buyers. An updated two-flat with a vacant unit for an owner to move into can draw plenty of them.
What paperwork do buyers want?
- Rent roll. Each unit, tenant name, monthly rent, lease start and end dates, deposit held and any prepaid rent.
- Leases. Copies of every current lease and renewal, plus notes on any month-to-month or verbal arrangements.
- Deposit records. What each tenant paid, where it’s held, and the interest paid each year.
- Operating costs. Recent utility bills you pay as the landlord, plus insurance and property tax bills.
- Zoning certification. The City of Chicago requires a zoning certification when residential property with five or fewer units is sold. Condos and co-ops are excluded. It certifies how many units are legal under the zoning ordinance, and the filing fee is $120. If there’s a basement or attic unit the city doesn’t count, you want to know before a buyer does.
How much notice do Chicago tenants get if a lease won’t be renewed?
If a buyer wants a unit empty, or you want it empty before you list, the RLTO sets how much notice a tenant gets that a lease won’t be renewed or a month-to-month tenancy will end:
- 30 days if the tenant has lived there six months or less.
- 60 days if more than six months but less than three years.
- 120 days if more than three years.
The same tiers apply to rent increase notices at renewal, and a landlord can’t require a tenant to renew more than 90 days before the current lease ends. A sale by itself doesn’t end a lease. The leases stay in place, and the buyer steps in as the landlord. For harder situations, see our page on problem tenants in Chicago.
Can you show an occupied unit in Chicago?
Yes. Under the RLTO, a tenant can’t unreasonably refuse entry so the landlord can show the unit to prospective or actual buyers, lenders or contractors. The landlord has to give at least two days’ notice, and entry between 8 a.m. and 8 p.m. is presumed reasonable. The right of entry can’t be used to harass a tenant. Tenants tend to cooperate more when showings are grouped, scheduled well ahead and kept short. A long listing with frequent showings can wear on them. A sale to a cash buyer usually means one walk-through per unit.
What happens to security deposits and interest at closing?
The deposits go to the buyer. Under the RLTO, the new owner becomes liable for deposits and prepaid rent the old owner collected and must tell each tenant in writing, within 14 days of the transfer, that the deposit was transferred. The seller stays liable until the deposit is actually transferred and that notice is given. Deposits are commonly handled as a credit to the buyer at closing, so the title company should have an accurate deposit list.
Chicago landlords also owe interest each year on deposits and prepaid rent held more than six months, at a rate the City Comptroller sets. The 2026 rate is 0.01%. Settle any interest owed through the closing date so no tenant is shorted.
Does the RLTO apply if you live in the building?
Not to units in an owner-occupied building with six or fewer units. If you live in one unit of your two-flat or three-flat, the city ordinance doesn’t cover the other units, and your tenants’ rights come from their leases and Illinois law. That changes at the sale. When the buyer is an investor who won’t live there, the building falls under the RLTO, so notice and deposit rules matter from day one of the new ownership.
How does financing change who will buy your building?
Two- to four-unit buildings get some of the most generous owner-occupant financing. FHA loans allow 3.5% down for a buyer who will live in the building, but three- and four-unit buildings must pass a self-sufficiency test, where 75% of the expected rents has to cover the full monthly payment. Since November 2023, Fannie Mae has allowed as little as 5% down on owner-occupied two- to four-unit purchases. Investors don’t qualify for those programs and usually need a larger down payment, so they look harder at the rent roll and repair costs.
Low-down-payment loans come with appraisals and property standards. Peeling paint, missing handrails, a worn-out roof or an illegal unit can hold up an FHA or conventional loan. A buyer who plans to move in also usually needs a unit empty at or soon after closing, which brings the RLTO notice periods into the timeline.
How a cash sale with tenants in place works with us
We buy two-flats and three-flats across Chicago and nearby suburbs such as Cicero and Berwyn, with tenants in place.
- Send us the address, the rent roll and what you know about the building’s condition.
- We walk through each unit once, with proper notice to your tenants.
- Within 24 hours you get a fair cash offer, and we show the math, including the rents and repairs we used.
- Nobody has to move out, and nothing has to be fixed. Leases and deposits transfer at closing.
- We close at a local title company in as little as 2–3 weeks, or on your date. We pay normal closing costs and all transfer taxes, including Chicago’s, and there are no commissions or fees.
If the building is updated, the units are full at market rents and you have time, listing may bring a higher price. If it needs work, has a difficult tenant or you’re done being a landlord, a cash sale is simpler. Read more about selling a rental property in Chicago and selling a building that needs repairs, or see the Chicago neighborhoods we buy in.
Curious what your building would bring as-is, tenants and all? Request a free cash offer with no obligation, or call or text (773) 825-9855.
This guide is general information, not legal advice. Talk with a Chicago real estate attorney about your leases and the RLTO.