I’m back now and looking for some guidance on an idea that caught my attention.An old high school friend of mine has been buying older houses, either renovating or tearing them down and rebuilding, depending on their condition.

I'll echo what Zeke mentioned about interviewing multiple realtors / PM's / Contractors to make sure you can get a good idea of what the area is like, in addition to working with someone you're comfortable with. 

I have a lot of ideas on how to buy real estate with no money (Novation, Subject To, owner financed), to partner with someone who has money, and/or to buy for yourself with money. 

Ensure you understand local regulations regarding permits; it’s usually a good idea for your associates to form an LLC for liability protection, but individuals can do renovations as long as they pull the necessary permits.

Does anyone know, or have a good idea, about the difference in returns on entitling & developing the land for each scenario, with final objective to sell to a builder to build and sell the structures him/herself.  

If you don't have a crazy house like a potato, a tremendous view or historical area, then choosing a pic is harder.I like the idea of the game room if that is your best feature.

Quote from @Travis Timmons: It's a great idea if you can swing it.

I feel I have a rough idea, which is..I'm in Rogers Park, my next important step is to wait out 1.5 years until I can fully rent out the condo, but for the meanwhile get a roommate to save more money.

I like both of your ideas so I would look for the single where an ADU is permitted or one with a dump ADU to renovate (that's best) and balance that against the purchase of a 2-4 unit.

But it gives an idea of the basic considerations and protections you want to have.