Multifamily vs. 2 Single Family Homes

[Chris Heyman]

Hey All!

Long time listener, first time caller... uh poster.

If it helps form your opinion, a little background: We currently own a duplex down condo on the Far North side of Chicago, IL that we purchased almost two years ago. We plan to sell in a few months once we hit two years in our current place, and finally start our real estate investing adventure. We've been reading, researching, and running numbers since last fall and planned on house hacking a multifamily property, and then possibly moving out after a year. We want to find something less than an hour from Naperville, IL(so mostly western and southwestern suburbs) and are hoping to have at least $70,000(possibly as high as $100,000) available for necessary costs to get started(down payment, closing costs, hopefully a bit in reserves, etc.). We would like to find something that is in good shape, possibly updated, and does not require much if any repairs. We have found plenty of properties that seem to fit this, but the only properties that actually cash flow at all, either require a huge down payment(which feels like fudging the numbers), or is a lower class (C class in an A-to-C scale) property or area. Also, we are planning to self manage, and would like to get the experience as landlords.

Where we are at now: After researching properties and running numbers for months now(just about every multifamily that pops on the market), we are finding that many, if not most do not make a ton of sense unless we fudge the numbers to show cash flow. We are definitely buy and hold minded, and get that Chicago may not be an ideal location for cash flowing like crazy, but we obviously don't want to be in the red right off the bat. Ideally we would have a lot lower housing costs personally than we currently do($2,200/month), and hopefully cash flow something, while we continue to save for the next investment property. So we have begun to look at and run numbers on single family homes, in addition to continually number crunching multifamily properties. We realize if we will have to purchase two homes at once, the investment property will require at least 20% down with a conventional mortgage. We are okay with that if the numbers work, and we can make it work.

So with all that said, our main questions at the moment are: 

1. Do multifamily or single family homes make more financial sense to cash flow buy and hold in the Chicagoland suburbs?
2. What calculations make the most sense to look at for buy and hold cash flowing properties, and specifically in Illinois? 
3. Should we be making any specific assumptions for our market in these calculations? 
4. Should we run numbers for a low down payment mortgage(3.5 or 5%), or is 20% valid if we are willing to spend it? 
5. If we go SFH, what are the downsides to putting down 20% on the investment property besides less cash in the bank?

Thanks a ton!

Chris