I probably can get 1500-1800 per month rent for a 3 bedroom, 2 bath (appx 1200 square feet) and can build for 174,500.

Here's the City link for you to reference. https://www.chicago.gov/city/en/depts/doh/provdrs/homeowners...1) ADU regulations specifically exclude Short-Term Rentals so don't do it if the intention is to short-term rental. 2) The ceiling height oh 6'10" is almost guaranteed to trigger digging a basement if you want to formalize as an ADU unit, especially if that height is further reduced by pipes or HVAC. 3)Ingress/egress is an issue for renting, as is that any bedroom also will need two (ie operable window/doorway).

What is unit mix of 1/2/3 bedrooms? 

How many bedrooms does it have and what do you think it'll rent for?

Buy a 4-5 bedroom house and rent bedrooms.

Would a property with 4 bed or 5 bedroom would have a better cash flow ? 

Especially, is you are just starting your real estate investment journey, a small 2 bedroom 2 bath duplex each side is the best.  

It’s in pretty good shape at this point, rentable.I travel a lot for work, and a friend gave me the idea to do a short term rental as a one bedroom, locking all of my stuff in the other bedroom and office - I applied today and was denied because I don’t own both sides of my HPR, even though I have written permission from the owner of the other half….

Finally, check with the Town to make sure there are no municipal liens, Make sure they're on Town sewer, check with the tax assessor to see how many bedrooms the tax office thinks there are, (important if you are flipping) buy ok to have more bedrooms if you are planning to buy and hold.  

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