Consider requiring them to move in with all new belongings and no current anything to further mitigate the bedbug risk.The certification will delay their move-in a few months which you can partially cover by requiring a higher rent from them to hold the property.

Every business faces a critical decision-making period when deciding whether to accept or go ahead with a business deal. This is where expert due diligence comes in, so as to avoid gambling away your business.
Expert...

Is the Property & Liability (Package or BOP) coverage being cancelled or just the Flood2. what were the dates, type of damage, and amounts paid on the claims3. what has been done to mitigate the chance of this happening again4.

If one location goes bad, flooded with poor drainage, fire outbreak, riots, weather related destruction etc, the other property is protected. 

I don't think anyone with Chicago knowledge is going to be able to tell you something that will help you mitigate the risks on this.

As some of the others said, it doesn't really matter where you buy as long as you have a good team in place, being closer just mitigates risk in the beginning.

Banks will see an operating agreement as mitigating risk for the company to have problems, and therefore less risky to loan money.

The way to mitigate this risk is by getting a permit to legalize the unit(which may be a bit more difficult) or duplex the unit with digging down the basement to be in compliance with zoning and building codes. 

If I don’t succeed as a wholesaler, I would probably fare well in Risk Mitigation/Management, lol!

Additionally, I'm curious about any potential pitfalls I should be aware of with student rentals and how to mitigate them.Thank you in advance for your insights!