Creative Design Presents Great BRRRR Opportunity?

[Steven Birch]

Hey Guys! WARNING LONG POST ALERT

I recently ran across a property that presents all kinds of potential but not without great risk. I'm looking for insight from the group at large on a couple areas I'm not familiar with. 

Context-This property is located in Northwest Suburbs of Chicagoland near a large hospital, Metra Train Station, a fantastic school district and very affluent neighborhoods with a couple million dollar plus homes. 

Overview-The building is located on a 1+ acre of land with roughly half of the acre cleared out, perfectly flat, and set back from any major roads. The building is currently a 2 bed, 1 bath, 1200 Sqft apartment sitting above a 1200 Sqft garage that is used by the owner of the land to store banquet hall equipment. House/land is listed for roughly $200k with a couple nudges from the selling agent that this property owner is looking to SELL and SELL QUICK. Taxes are roughly $3300 a year.

Plans-Given the area, large plots of land in that area don't come up for sale as the area is well built up and very costly to build structures and buy land. My plan would be to convert the bottom 1200 SqFt garage into another 2 bed 1 bath apartment thus creating a duplex. I would also renovate the upstairs apartment at the same time. Nearby duplexes are renting on average for $1300 a month resulting in $2600 a month.

The Ugly---

1) The land is being sold on well and septic with no real feasible way to connect to city sewer/water being the connection is over 400ft away and would be much too costly to make sense. 

2)The well is actually located on the adjacent property (owner of this acre also owns that acre the well is on which is occupied by a large business) thus creating a tricky situation where my property would have no actual access to water without needing access to his property. While in the current arrangement it may not be an issue, if he sells his business, there's no guarantee the next business owner would be so receptive. 

MY QUESTIONS-

1)What in your guys experience is the average cost to drill a new well? This will be negotiated into the deal being as you can't sell it as a "home" without access to water on the property. Therefore he will have to sell it as "land" which drastically brings the price down. 

2)What is the cost of adding a 2nd water meter/2nd electric meter for the downstairs apartment OR anyone use another solution (flat rate?) to force tenants to pay for those utilities? Being the bottom floor will be under full construction anyway, I rather address all electric/water issues in the beginning. 

3) What kind of permit requirements/red tape have you encountered for another meter/adding a well?

I appreciate all of your insights. Hoping the end results in a fully renovated duplex sitting on an acre of land with tons of room to grow with the rest of the land in the future.