I've offered to book them a room in a nearby hotel to shower, etc.Clearly they would have a habitability defense in not paying rent.  

If the rental is nearby, why not drive by and pick it up on the first? 

I'm interested in doing buy and holds in Chicago and nearby suburbs.

Check out the nearby members and network https://www.biggerpockets.com/meet , it will help you a lot to find partners that can help you out in investing.

We would love to purchase a multi family nearby and have been looking into hard money loans to do it.

However, this is also in what I believe to be a great area (near a park, college, and other great homes).My question:Since  there are no nearby (within a half mile), recently sold duplexes in the area, can I just take a single family home with good comps to come up with my ARV?

Property is in a great area with businesses, restaurants, and schools nearby.

Hospitals are large employes with employees who need to live nearby and there's a lot of turnover and they hire young new emplyees all the time who need a place to rent.

Like @Aaron Stuiber said, really dig into the comps (I use Zillow's map feature and look for nearby solds, but there are other options)  and make sure you are truly getting that much instant equity.

I find that investing works best in areas where you posses a unique advantage, so in this case it could be a neighborhood that you are intimately familiar with due to local knowledge...growing up nearby etc...After you find that submarket, I would drive the blocks/streets and get an unscientific opinion on the area around you, meaning how does it "feel."