A Colliers broker says some Chicago investors raised rents $300 to $400 a month with cosmetic upgrades while the roof, plumbing, and electrical waited. Here is how to sort the two
Walk through enough older apartment buildings and the pattern is easy to spot. The kitchens look great. The ceiling above the top floor has a water stain.
That is not just a hunch. In a July Bisnow story on Chicago's older apartments, Tyler Hague of Colliers described investors who bought older buildings cheaply in the last cycle and upgraded the units. They put in granite countertops, a backsplash, and new lighting, he said, and rents went up $300 to $400 a month. But the problems at the building that probably existed for 20 years, such as roofing, windows, plumbing, and electrical, were still there.
Cosmetic work is not a mistake. It is a question of order and budget. Here is how to think about it.
Why the Money Is Tight
Yardi Matrix data cited in the same story shows what the squeeze looks like. Chicago's occupancy rate reached 96 percent year to date, the highest sustained level in the 15-year dataset. Rents for what Yardi calls renters-by-necessity, a proxy for Class C and workforce apartments, rose from about $1,000 a month in 2010 to nearly $1,700 in 2026, a 72 percent gain. Over the same period, overall market rent rose about 56 percent.
But full buildings are not the same as profitable buildings. The 454 distressed Chicago properties in the Yardi dataset average 94.4 percent occupancy and a debt service coverage ratio of 0.94, meaning income does not cover the debt once insurance, property taxes, and utilities are added. Yardi also notes that rent-to-income ratios for typical workforce tenants are approaching 30 to 35 percent, which narrows the room for more rent growth.
In other words, the rent bump from a kitchen upgrade may not be enough to carry a building that also needs a roof.
What a Roof's Age Means for Cost and Risk
There is no single lifespan for a roof. Published estimates for flat and low-slope roofs vary by system, and most of what is easy to find comes from trade groups and contractors, not independent testing. Commonly cited ranges are about 15 to 25 years for modified bitumen and 20 to 30 years for TPO. The EPDM Roofing Association puts properly installed and maintained EPDM at around 38 years. Maintenance, drainage, and installation quality matter as much as the material.
So a 20-year-old roof is not automatically finished. It is a roof that deserves an inspection, and an inspection will tell you more than its age.
Insurance is where age often shows up in dollars. Many carriers use roof payment schedules, which pay a percentage of replacement cost based on the roof's material and age, and some add actual-cash-value roof endorsements when an older roof does not qualify for full replacement cost. These schedules are most often described for wind and hail losses. The details vary by carrier and policy, so ask your broker how your policy treats roof age before you decide.
The Chicago Fed heard something similar from Rogers Park owners in February. They said coverage often comes with repair and maintenance stipulations, such as replacing roofs, and that owners of older buildings are finding it particularly hard to get affordable insurance. Those findings were reported by about 20 owners, and they are not a rule for every building. But they point the same direction.
What a Chicago Reroof Involves
Roofing in Chicago is not just a swap of materials. The city's Express Permit Program covers reroofing, including roof repair limited to 25 percent of the roof area, a roof recover over one existing layer, and roof replacement without structural work. Applicants need an Illinois roofing contractor license on the job, an existing-condition photograph, and a general contractor. Structural repairs, or a recover over two or more existing layers, require drawings or calculations from an Illinois-licensed architect or structural engineer.
The city also says work must meet the minimum insulation requirements in the Chicago Energy Transformation Code, and a building with an unpermitted rooftop feature, such as a deck, is not eligible for the express program. In practice, that means a reroof on an older building can include insulation and rooftop issues that a cosmetic budget never imagined. Confirm the current requirements with the Department of Buildings before you set a number.
Costs for low-slope roofing vary widely by system, size, and access, and published per-square-foot ranges disagree with each other. A written bid for your building is worth more than any average.
A Simple Way to Sort the Work
Start with what lets water in or puts people at risk: the roof, flashing, drains, porches and stairs, and the electrical service. These protect everything else. Next come systems that affect insurance or lender requirements, such as plumbing stacks and the heating plant. Last come the upgrades that raise rent but do not protect the building, such as finishes, fixtures, and amenities.
That order does not mean cosmetic work waits forever. Many owners phase it, doing the roof first and upgrading interiors as units turn over. Interior finishes do not last long under a leak. A new countertop is a poor place to learn that the roof was failing.
Questions to Ask Before You Pick Granite
How old is the roof, what is it made of, and when was it last inspected? Are there leaks, ponding water, or failed flashing at the parapets? What does the insurer say about roof age, and what does the lender expect in reserves? What would the roof cost with a written bid, including insulation required by code? And can the work be phased so tenants stay in place?
A contractor's walk through the building, roof included, can put numbers on all of that. For owners of older multifamily buildings, it turns a long wish list into a sorted, priced plan.
Weighing a Roof Against a Unit Upgrade?
A walk through the building, roof included, can sort repairs by urgency, price them, and show what can be phased around tenants.
If you own or are buying an older apartment building in Chicago or the suburbs, we would be glad to walk it with you.
If you are weighing a roof against a unit upgrade, walk the building with us. Request a walk