You're definitely not alone—several Chicago landlords have reported similar issues after getting new meters installed.

I've done these for 5 years now and the fund gets audited every time - knock on wood the outcomes continue to be favorable.

However since this is our first rental, we are getting cold feet and suspicion that it might be a money pit or go wrong drastically.

So it does appear to be possible to get an FHA 203k loan for a 5-unit & convert to a 4-unit.When possible, aim for the Limited (aka Streamline) 203k loan, as it's less complex, not required to get an FHA consultant, etc.Of course, this is based of the two following important assumptions:1)  zoning allows for this2)  and obviously I owner occupy for at least 12 months3)  the total purchase price + renovations are within the FHA loan limits specific to my areaWhat I'm confused about is the timeline or chronological order of the process? 

At least you'll probably get most of your money back when the deal gets refinanced or sold.

Only do that though if you can pay it off or get close to paying it off within a couple of years before the interest rate changes. 

If they are seniors there’s a senior abuse government agency that could get involved.

You could always get the extended warranty and still save money over the 3k model.

He found it because he doubles as a painter and the seller wanted to get the house ready to put on the market in the spring/ summer.

If so I would thoroughly ready this to see what they require and what you agreed to.I doubt you can keep your permit if you refuse their inspection.If you are doing everything as you should, you shouldn't have anything to worry about.