This would quickly return most of my cash to me, which I need in order to complete a fairly extensive renovation prior to moving in.The problem I'm running into with my current lender is the timing. 

What are some ways to structure an agreement where I can retain and rent the property but he can get a good return as well?

That lead me to looking for below market, distressed single units, in Chicago, in neighborhoods with a high rent demand, and that still seems like a decent idea but I'm not getting the return I'd like, but would still be netting positive.

You have aggressively dropped down your student debt, I say continue the progress and pay it off for you can potentially buy a bigger home (4 fam) owner occupied once you are done.Or if you are comfortable with debt you can make a bigger return investing and that can help you pay down your debt. if you are I will get a owner occupied 2-4 family with a seller concession (depending how competitive your area is) for you won't have a high closing cost.

ROI: The returns are not stellar, but they are steady.  

That's the key; well maintained airbnb make for a positive return visit. 

You may want to keep that in mind, thus some of the responses are going to be geared toward that end (i.e. the best return on your investment). 

@Shmuel Waldman The big issue I see is your cash on cash return being less than 10%.

If you are soliciting people that you did not know before then they need to have a worth of 250k to be an accredited investor .I've talked to flippers who basically pay a return on money to people who go into a deal with an annualized rate and then maybe some basis points.

You do not want the cheapest tax returns in town.