Per code, as-of-right, a building with a CMX-1 zone designation is permitted a maximum of two or three dwelling units (dependent on lot size) plus any applicable housing density bonus pursuant to section 14-702(7).

That is quite the open ended question given Chicago and it's size!  

If it is a normal 70/30 leveraged property, you may end up subject to tax on 70% of your returns anyways - so cost benefit, is that 30% tax free portion worth the high tax rates paid and additional filing fees to get tax free treatment on the 30%?

Certainly using cash or that of a lender/transactional funder to close your original transaction, then close your B-C is legal as far as that portion is concerned.

It is located in a Medium sized tourist town in Missouri.

Were generating leads all over the country and the lot sizes vary greatly as well.

Folks don't go broke taking a profit.That said, if real estate is a long-term business for you, maybe start portioning cash flow into capx so these issues/expenses aren't as worrisome. 

@Deborah BrancheauI would say this is for the average size market.

Then, the builders came from all over the country as South Tampa became the number One place in the US to buy Tear Down wooden houses to build Two Story Block houses and Townhomes, with 80% building square footage to lot size.

The main reason I chose Sacramento is because I could find a nice duplex/triplex for a portion of the price of a SFH over in San Jose.