Perhaps 75% of comparable 2 bedroom units rent between $1100-1400 per month.

Elgin is a great rental property market, but the city does require inspections every 2 years, and you do have to take a landlord class.If you can househack a 3-4 unit building out in your area, that will be a golden ticket to get started. 

For me, I acquired a portfolio of seven four-unit buildings all in the same neighborhood.

I assume this is 1-4 units? 

I own 52 units of California real estate, and it's the best thing I've ever done financially, but owning the right assets is absolutely imperative, and it's difficult to do.

Hey @Daniel Curtin - Blue Island is a great area to invest in as cash flow is a little stronger and taxes are not horrifically high and they have a great deal of 4+ units, as well. 

The lowest barrier to entry I've seen for house hacking would be to find areas with grant loans, there are several here in central OH, they are general "majority minority" areas, but many local banks are incentivized to do loans in these areas, so you can often get into a 2-4 unit with no money down, and 15K towards closing costs and rate by down. 

The reality is that the tax impact and ability to take ANY losses (as Michael mentioned) is based on a number of factors that include whether or not it is a "separate dwelling unit".

I plan on updating my unit this year as well and wonder if my labor to update the floors and outdoor space will count towards "material participation".

It is best to have a conversation with them to see how much time they need to move and explain why you are turning over the unit.