The 1920s courtyard building is the characteristic multifamily asset across South Shore, Chatham and the surrounding areas. They can be excellent holds. They also concentrate a specific set of risks.
The boiler
Most were built with a single central boiler serving every unit. That means the owner pays heat, which materially changes the operating numbers relative to a separately metered building.
Establish the boiler's age and condition early. Replacement on a large building is a substantial capital item, and it tends to fail in January rather than July.
Masonry and the parapet
Tuckpointing is close to universal on buildings of this age. What matters is the extent, and whether the parapet and lintels are sound.
Water entering through failed masonry is the origin of a large share of the interior damage you will see in these buildings, so the envelope should be assessed before the units.
Plumbing risers and electrical service
Galvanised supply lines are common and they fail progressively. Replacement in an occupied building is disruptive and expensive, so knowing what is behind the walls matters.
Check whether the electrical service is adequate for the unit count and whether units are separately metered.
The rent roll and who is in the building
Ask for actual rents, written leases, and the occupancy by unit. Partially occupied buildings are common and often price well, but the plan for the vacant units needs to be real.
The tenancy transfers to you at closing, and Chicago's Residential Landlord and Tenant Ordinance applies from that day.
The mark-to-market question
The usual thesis on these buildings is that in-place rents sit below what the units would achieve renovated. That is frequently true. Whether you can realise it depends on turnover, the cost of turning each unit, and how long the process takes.
Underwrite it on a realistic pace rather than assuming the whole building resets in year one.