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Author: Mark Ainely | Partner GC Realty & Development & Co-Host Straight Up Chicago Investor Podcast
My name is Mark Ainley. I am a Chicago property manager, real estate investor, and co-host of the Straight Up Chicago Investor Podcast. Every week, I talk with landlords across the city and suburbs about challenges that usually come down to the same theme: “I did not know the village required that.”
In 2025, rental licensing is one of those topics that can quietly make or break your deal as a landlord. It affects your timeline, your cash flow, who you can hire, and in some suburbs, it can even decide whether you are allowed to rent the property at all.
If you are a Chicago landlord, an investor looking at the suburbs, or an Illinois property owner thinking about turning your home into a rental, you need to understand how rental license rules really work in our market. It is not the most exciting topic, but it is one that can either protect you or punch a big hole in your returns.
What Is a Rental License and Why Do Towns Care?
At a basic level, a rental license is the village or city’s way of saying, “Yes, we know this is being used as a rental, and we approve it under our rules.”
Licensing programs really started gaining traction around here 20 to 25 years ago. They grew alongside things like the crime-free housing programs, which originally came out of Arizona. The idea was to educate landlords, get better control of problem buildings, and prevent tragedies like fatal fires in overcrowded, poorly maintained properties.
From the town’s perspective, a rental license is about:
Life safety: smoke detectors, GFCI outlets, furnaces, boilers, egress.
Occupancy control: not letting six families live in a 120 year old house.
Revenue: annual fees, inspection charges, reinspection fees.
Leverage: having a way to force repairs, improvements, or even cap rental density.
From the landlord’s perspective, it can be:
A reasonable safety checklist that you should be doing anyway, or
A never ending punch list where one inspector after another keeps “finding” new items.
Part of being an effective Chicago property manager is knowing which suburbs fall into each category and how to navigate them.
How Rental Licensing Works Around Chicago and The Suburbs
Here is the first thing most newer investors do not realize:
There are over 180 suburbs around Chicago, and well over half of them have some form of rental licensing. Every village writes their own rules. That means:
Some require a license but no inspection.
Some require an annual inspection on top of the fee.
Some split the rules between condos/townhomes and single family homes.
Some stabilize your renewal date to the calendar year, others to your original approval date.
Some cities have no rental license at all, which can be a real relief on the management side.
Take a few examples:
Condos and townhomes pay the annual license fee, no inspection.
Single family homes pay a higher fee and must pass an annual inspection.
Similar split. Single family holds get inspected, attached units are treated more lightly.
Roselle and Naperville:
As of this writing, no rental license program, which removes an entire layer of complexity.
Then you have timing:
Some towns renew on your anniversary date. If you register in June, you renew every June.
Others renew on calendar year. Places like Streamwood and Des Plaines expect everyone to renew in December for the coming year, no matter when you started.
This is why, at GC Realty & Development, we maintain our own internal spreadsheet of villages, rental license requirements, and point-of-sale rules. When someone asks, “Should I buy here?” the rental license column is one of the first things I look at.
Inspection Basics: What Villages Really Look For
Most rental license inspections are supposed to be focused on life safety. If you are already operating like a responsible landlord, you should not be terrified of the inspection itself.
Common items they look for:
Working smoke detectors in the right locations.
Proper GFCI outlets near water, and now often on exteriors and in garages.
Handrails, guardrails, clear egress, intact stairs.
Proper venting on furnaces, boilers, and water heaters.
No obvious tripping hazards, exposed wiring, or broken glazing.
In our experience managing hundreds of Chicago area rentals, here is where it gets tricky:
Smoke Detectors
Smoke detectors belong in every good rental, but the details vary by village.
Some towns require detectors in every bedroom, plus in common areas.
Others follow a more standard pattern, like within 15 feet of sleeping areas and on every level.
Illinois now requires 10 year sealed units, which are great long term but more expensive up front.
In a town like Glendale Heights, you can end up with four detectors within 20 feet of each other. On a three bedroom layout, that is a lot of plastic on the ceiling and a couple hundred dollars in detectors.
GFCI Outlets
Older housing stock is where GFCI becomes a major line item. It used to only be within a few feet of water. Now it usually includes:
Kitchens, bathrooms, laundry rooms.
Exterior outlets.
Garage outlets, sometimes even inside the garage.
If you are buying a 1960s or 1970s house and converting it to a rental, budgeting a real number for electrical upgrades is smart. In some suburbs, if the inspector flags missing GFCI, you now have to use a licensed electrician with a permit, which adds time and cost, not just parts.
Mechanical Equipment and Retroactive Permits
Some municipalities have gotten aggressive about retroactive permits.
If they see:
A fairly new water heater with fresh copper, or
A newer furnace with upgraded exhaust,
they may ask, “Where is the permit?” If they do not see it in their system, they make you:
Hire a licensed and registered contractor,
Pull a permit,
Pay the fee,
And pass a separate mechanical inspection.
That hot water heater that looked like a quick win can suddenly cost another few hundred dollars.
When Distance Forces You To Hire a Property Manager
Some suburbs around Chicago have written into their landlord laws that you either:
Must live within a certain distance, often 30 minutes of the property, or
You must have it professionally managed.
Places like Aurora, Mount Prospect, Streamwood, and Des Plaines are examples where this has come up. If you move out of state and keep your old home as a rental there, the village is going to want a local, accountable party on record.
This is one reason we regularly get calls that sound like, “I moved to Florida, but the village is telling me I need a Chicago property manager. Can you help me get compliant?”
From their point of view, they want someone who can show up when there is a problem. From your point of view, it is one more example of how property management in Chicago and the suburbs is driven by local rules, not just what you think is “reasonable.”
South Suburbs: Same Cash Flow On Paper, Different Reality In Practice
Let us talk about the south suburbs, because this is where a lot of investors get caught off guard.
On paper, areas like Hazel Crest, Sauk Village, Glenwood, Country Club Hills, Markham, South Holland and others can look very attractive. Prices are lower, gross rents look strong, and cap rates jump off the spreadsheet.
Then the rental licensing and inspection machine kicks on.
A few real examples we have seen:
Sauk Village:
You must hire one of a few approved third party inspectors.
If you fail, you have 30 days to complete all work and pass reinspection.
Miss the window, and you start over with new fees and new inspections.
Hazel Crest:
Requires a point-of-sale inspection when you buy.
If it was not done before closing, the buyer is forced to get it after the fact.
Then you still have to do a separate rental license inspection with a different inspector, who can add new items to the list.
Glenwood:
We have seen boiler certifications lag by years.
The village will tag it, fine the owner, and force you to bring in the state boiler inspector and spend real money quickly.
On top of that, record keeping in some south suburbs is still paper based. We have had inspectors show up without the previous list, treat the visit like a first inspection, and create an entirely new punch list, even though we already addressed items from the last round.
The end result for landlords:
Extra inspections,
Unplanned scope of work,
Multiple layers of Section 8 inspections plus village inspections,
And a lot of time spent arguing over items like tree stumps, fence height, or sewer caps.
If you do not underwrite rental license costs and compliance risk into your south suburb deals, your projected cash flow will not survive the first two years of ownership.
Caps, Moratoriums, And “No More Rental Licenses”
Another twist we are seeing more often is municipalities using the rental license program to control density.
Some examples of what is happening:
Temporary moratoriums on new rental licenses.
Permanent bans on new rental licenses in certain towns.
Caps on the percentage of units in a complex or subdivision that can be rented.
South Holland, Country Club Hills, and Markham have all taken versions of this approach at different times. In Markham, for example, the decision to essentially stop allowing new rentals came even though the overall ratio of rentals to owner-occupants was not extreme.
If you buy a condo or house planning to rent it out and then find out “We are not issuing new rental licenses,” your options are:
Rent illegally and hope you do not get caught,
Sell,
Or move back in.
That is a brutal surprise. This is why, at GC Realty, we always tell investors: before you buy, confirm the rental license policy for that specific town and asset type.
Best Practices To Stay Compliant With Chicago Landlord Laws And Village Rules
So how do you adapt to all of this without driving yourself crazy?
Here are some best practices we follow and recommend as a Chicago property manager:
1. Check Rental License Requirements Before You Go Under Contract
Do not wait until the week of closing to ask, “Does this town require a rental license?”
Look up whether the village has
Rental licensing,
Point-of-sale inspections,
Special rules for non-owner occupants.
Confirm whether condos, townhomes, and single-family homes are treated differently.
If the town is known for being difficult, that does not mean you should not invest there. It just means your numbers, scope, and timeline need to reflect reality.
2. Budget For Inspections And Upgrades
When you underwrite a deal, include line items for:
Rental license fees,
Anticipated electrical upgrades (GFCI, smoke detectors),
Possible mechanical permits,
Section 8 inspections, if applicable,
And one full “surprise list” from the inspector.
It is much easier to be pleasantly surprised than to scramble for cash when the village hands you a six page list.
3. Use a Standard Pre-Inspection Checklist
At GC Realty & Development, we built a detailed inspection checklist modeled off one of the stricter suburbs, Elgin. If a property can pass that standard, it will usually fly through most other village inspections.
Our team uses that web-based form as a pre-inspection:
Before listing a property, we walk it with the checklist.
We fix obvious life safety issues first.
We document conditions to show progress if questions come up later.
You can do the same, even as a DIY landlord. Pick one of the stricter suburbs as your baseline and walk your units against that list.
4. Respect Timelines, Especially In Tough Villages
If a town gives you 30 days to complete repairs and pass reinspection, treat that like a hard deadline.
This means:
Have contractors lined up before the first inspection.
Have a clear scope ready to go.
Avoid arguing about small items until the bigger ones are complete.
Failures and missed deadlines are how fees pile up and how some investors get a reputation with the village that you do not want.
5. Consider Professional Management Where Required Or Just Practical
If a town requires you to live within 30 minutes or hire a Chicago area property manager, do not fight it. And even in towns where it is not required, a local manager who knows the inspectors, the processes, and the usual pitfalls can save you both money and sanity.
How GC Realty Approaches Rental Licensing As Part of Good Management
At GC Realty & Development, we have learned that rental licensing is not a one-time task, it is a system.
In our experience managing hundreds of rentals across Chicago, the north and northwest suburbs, and the south suburbs, the landlords who do best are the ones who:
Treat the village as part of the process, not the enemy.
Build rental license costs into their underwriting.
Use a consistent pre-inspection checklist.
Stay proactive instead of waiting for letters and fines.
And underneath all of that, there is one thing that matters more than anything else:
The number one way to avoid costly evictions, village issues, and resident drama is to start with strong tenant screening.
If you are going to spend money and energy anywhere, spend it on tenant screening in Chicago and the surrounding suburbs. When you have responsible residents who report issues, pay on time, and treat the property well, everything about rental licensing becomes easier. Inspections are less stressful, renewal is smoother, and your relationship with the village stays positive.
That is the philosophy we use inside GC Realty:
Screen carefully and fairly.
Maintain properties to a high standard.
Be responsive when residents or villages raise concerns.
Keep clear records so that when a village inspector questions something, we can show what was done and when.
Closing: What To Do Next If You Own Rentals Around Chicago
If you are already a landlord, or if you are thinking about buying in a new suburb, use rental licensing as a filter, not a fear.
Ask yourself:
Do I fully understand the rental license requirements for this town?
Did I budget enough for inspections, permits, and surprises?
Do I have a checklist and a process, or am I winging it?
If you own a rental in the Chicago area and want to make sure your property is performing the way it should, start by getting a Free Rent Analysis, or download our Tenant Screening Mastery Guide to see the exact process we use to avoid evictions and protect our clients’ investments.
Who Is On Your Team?
We’ve shared a lot of information here on investing in real estate locally in Chicagoland. If you live outside the area, it may seem overwhelming for those wanting to invest in the Chicago market. But we just look at it as a team sport.
Who’s on your investing team? Do you even have a team? GC Realty & Development, LLC has a dedicated team of professionals willing to share decades of experience in all facets of real estate investment. We handle everything from brokerage, leasing, and property management. Whether you hire us or not, we’re happy to provide our resources and expertise.
What gets me up in the morning and keeps me going 12 hours a day is the ability to add value to local area investors in Chicago and beyond! Those who connect with me often hear me say that our goal is to bring value to everyone we come in contact with.
We hope that in return, they will one day hire us for our tenant placement or property management services, refer us to someone they know, or leave a review about our services. We would clearly love all three; however, we’re happy whenever we get the opportunity to help!
Reach out today!
Partner / Co-Host of Straight Up Chicago Investor Podcast
