Is there potential to use it for AirBnB or some other short term arrangement to increase the income?

If I am the one who is going to have to put in the time, effort, and potentially capital to raise rents or reduce operating costs, I'm not going to reward the Vendor for my efforts to improve the business.The long and short is: Base your offer on the current (and recent past) performance of the business and do not be tempted to pay more because there is untapped potential (higher rents, lower costs, etc).  

This would get me the property essentially free BUT would leave me with almost no passive income (break-even) because the rent is not high enough, the mortgage would be for 134K, the property tax is not helping and I would have to close twice in a short period.What am I concerned about:1.

I learned this after I did some more research. 5k on 100k LOC is really good when you compare it to a hard money loan, however, the damage it will do to your credit score short term is too much of a risk for me. 

I worry about city/government restrictions on short term rentals, but am not familiar with current laws in Chicago.

It might not make sense to do a 1031 exchange.In PA, state income tax will be due on the gain even if you do a 1031 exchange.You will have to pay a qualified intermediary (QI) to handle the 1031 exchange; that might run in the ballpark of $1000 or so.If you already held for a year, you are now into long term capital gains tax rate rather than short term.

I'm doing the best I can to manage the volume, but I fall short sometimes.4.  

BRRRR properties are normally purchased with short term financing (Hard Money, Private, Money, Cash, and a few other methods).  

I've worked for a company that put in about 50 mid range boilers over the course of a few short years and spent about 50% of my time just trying to get them to limp along in the winter.

Most of the people I work for use hard money for short term financing.There is a hook when you sell if the buyer is using an FHA loan.