New investors almost always say vacant. Experienced ones answer it deal by deal, because the two situations suit genuinely different models.
The case for vacant
You control the timeline. You can start work the day you close, price the finished product where the comparables support, and exit to whichever buyer pool you choose.
For fix-and-flip it is close to a requirement. You cannot renovate to a retail standard around a sitting tenant.
The case for occupied
Income from day one, no lease-up period, and no vacancy while you stabilise. For a buy-and-hold buyer, a fully leased building can be worth more than an empty one even at a higher price.
Occupied buildings also attract fewer bidders, which is frequently where the margin is.
What comes with the tenants
The tenancy transfers with the building. Existing leases bind you, security deposits must be accounted for correctly, and in Chicago the Residential Landlord and Tenant Ordinance applies from the day you close.
If in-place rents are below market, resetting them is a process governed by the lease terms and the applicable ordinance rather than something you can simply decide.
The middle case
Partially occupied buildings are common in South Side multifamily — a twelve-unit with eight leased. These reward buyers who can run the occupied portion while turning the rest, and they often price attractively because that is a narrower buyer pool.
Answer it explicitly on your buy box
Because it filters so much inventory, leaving it unanswered means either receiving deals you cannot use or missing ones you could. Both questions — vacant and occupied — can be yes.