Then, when they're ready to move in, they could convert it to a residence and remodel the house to fit their needs.I hope @Dave Foster and others can provide specifics on implementing this approach, especially when it comes to the long tax arm of California.

We have a somewhat specific wishlist for lending requirements and terms that I will highlight below.

Option 2: Electrician recommended mini splits - said 2 units should do the trick and would cost around $6-$7k.Heating system 2 is forced hot air oil furnace specifically for the 3rd unit.

It may be similar to other commercial lending options, but it really depends on the type of property and the procedure of the specific lender you're working with.

I would ask, when you say real estate, specifically what are you trying to accomplish or do?

Not sure of specifics.

There is no specific IRS-mandated minimum holding period for a property acquired through a 1031 exchange before you can retitle it, that's why it's hard to find an answer. 

Any HML will want answers to those questions plus a rehab budget before getting you a term sheet for a fix n flip loan for this property.I close these types of loans all the time, if you have any specific questions about the process don't hesitate to reach out.

Afraid of secondary effects, both Fannie and Freddie remain in conservatorship today.What specifically did they do wrong?

Do you have a specific area of Chicago where you would like to live?