Let's take a look at a condo building in Arlington Heights with 190 units as an example. This building had no rent cap, meaning there were no regulations limiting the number of rental units, and over 90 units were already being rented out. A buyer looking for investment units discovered this fact just before signing the contract.

Currently, there are 43 units for sale in the Arlington Heights condo market, with the median asking price around $230,000. Prices generally range from $200,000 to $300,000, making condos much more affordable compared to the citywide median listing price of $492,500. This price gap between single-family homes and condos can lower the entry barrier for first-time investors, but it also increases the likelihood that buyers may overlook important management regulations in favor of just the appealing price. Monthly fees vary significantly by building. For example, buildings like Metro Lofts have fees ranging from $400 to $700, while Arlington Reserve averages around $318.

Buildings without a rent cap may seem advantageous to investors since they can accept tenants at any time. However, this condition can also work against them. If the rental unit ratio becomes too high, there is a greater risk of being classified as non-warrantable during loan assessments, making it harder for future buyers to secure financing and narrowing the pool of potential buyers at resale. The buyer in the earlier example confirmed this aspect just before signing the contract.

In March 2026, Fannie Mae eliminated the 50 percent cap on rental unit ratios. However, in buildings with 21 or more units, there is still a provision that no single entity can own more than 20 percent of the total, so in a 190-unit building, the presence of a large owner exceeding this threshold becomes critical. Starting from applications submitted after August 3, the streamlined review for buildings with more than 10 units will be replaced with a formal review that examines budgets, reserve funds, delinquency rates, lawsuits, and special assessments.

It's worth noting that Illinois does not legally mandate minimum reserve fund ratios or regular reserve studies, which is a point of comparison with other states like Georgia and Hawaii. For special assessments, written notice is required at least 10 days and up to 30 days before board meetings, and if the total amount assessed for the current year exceeds 115 percent of the previous year, 20 percent of unit owners can sign to contest it, and the board must convene a meeting of unit owners within 30 days. Changes to common areas require two-thirds consent from unit owners for special assessments outside of the budget.

To summarize the items to check before signing a contract:

• Rental unit ratio and existence of a rent cap
• Ownership ratio of a single entity (whether it exceeds 20 percent)
• History of recent special assessment notifications
• Delinquency rate and any lawsuits
• Status of reserve fund accumulation and recent reserve studies

Since Illinois does not have a separate law mandating reserve studies, whether the management has conducted a study varies by building. If a building lacks study results, it is essential to request the latest financial statements from the management to directly check how much is accumulated in the reserve fund.

The buyer in the earlier example ultimately requested documents related to the rental unit ratio from the management before proceeding with the contract. Fortunately, there were no issues, but had the order of verification been reversed, it could have led to much more difficulty during the loan approval stage. Arlington Heights is a suburban area close to O'Hare Airport, with steady commuting demand, making rental turnover relatively smooth. However, it's also important to note that in buildings with a high rental unit ratio, owners may react more sensitively to future increases in management fees or special assessments than tenants. This article is not investment or legal advice, and it is recommended to review management documents and loan conditions with a professional before finalizing any contracts.