Again, some people skipped this step and are now seeing mold or foundation damage.Don't run the HVAC (if you still have one) until all of these steps are completed or you may have mold spores in your duct work and throughout the house. 

However, the pics suggest a crawl space (block foundation) for plumbing, ductwork, etc.

All new ductwork/piping or just dropping in a new furnace? 

I still think 203k multifamily can be done in Chicago (and I plan to), but you need a building that has solid duct work, plumbing, structural, to work with.

Also, ductwork is ~25 years old. - Outdated aluminum wiring and 15+ ungrounded outlets.I’m thinking that I will have them pay for mold remediation and vapor barrier installation (assuming that is the root cause of the moisture).

Allowing smoking outside will not work either because smoke does travel easily through open windows, doors, duct work, and utility chases.Also, in a multifamily building you need to establish policies that will enable a more congenial existence.

The property has had good cashflow considering we've had a few large repairs each year, but there are a few that will most likely require repairs within the next few years.The repairs would be: A/C unit, duct work, roof, railroad tie retaining wall, sprinkler system.If we sold before the end of may we would capture about $340k+ in our pocket tax free where we could put it in a CD at 5.5% for a year and pretty much get the same amount as we would from our rental.I know we could hold and roll it into a 1030 exchange, but the repairs will most likely eat into or profits.Any suggestions are welcome! 

I sent an AC company out there today to check it out and see if was a simple fix however, he stated that it needed all new duct work and blown in insulation to the tune of $5000.00.

Roof, paint (interior/exterior), subfloor, floors, duct work, front/back yard, fence, interior/exterior doors, master bath, converted half bath/laundry to full bath, moved laundry to utility room, kitchen counters, cabinets, appliances, deck, and many more minor details.

The inspectors kept failing me because the old stuff didn't mesh well with the new stuff So I replaced all duct work.