It sounds like you have a good idea how much rent the end product will probably fetch. 

I am surprised they are running out of hot water fast, the smaller tanks should heat the water faster than the larger 50 gallon tanks, maybe look into small tank heaters with more heating coils to heat the water even faster. take a look at this one, available from HD too https://www.rheem.com/product/marathon-30-gallon-e...that one may deliver enough hot water for your tenants.

Keep as a 3 flat rental and pay off the debt slow over 10 years, but have a good / steady rental income after that.2.

Set up systems much like a production line. 

It will be a slow down which has already started happening if you look at the indicators. 

If the lender doesn't perform in a timely manner, the buyer forfeits the escrow.The lender has been slow to respond on a few occassions but nothing like the week and a half it took for the seller to schedule the appriasal inspection... stating that the tenants needed to have proper notification.

Although these market still growing there is a real possibility of somewhat slow down and these type of strategies could turn to be a 7-10 plan. 

There are plenty of good folks out there, and I would recommend slowing building your contact list as you start needing things done and find good people for each specialty (plumbing, electrical, HVAC, general handyman work, etc.) 

I would ultimately want to add one investment property building per year, and specialize in 3 to 6 unit products to build a large portfolio of those products in the local Chicago market around Midway airport and the city itself. 

This trip has been very productive because for being here only a few days, I was able to see which part of town to possibly invest in and to stay away from.I was hoping to meet and personally shake hands with James Wise and Tom Ott, since I follow them on social media like YouTube, but I think these guys are busy--which is a good thing for their business.