So with that logic, I want the LP to be protected and get paid out a baseline return first, but if the property exceeds expectations I believe the GP should capture  higher returns.With the proposed 75/25 waterfall breakdown suggested by the LP, I feel that I would be under compensated the first 4 or so years and it may not be worth it for me considering the month of labor it takes to furnish the property and the approximately 100-150 hours a year it takes for me to manage the property.

I will definitely explore the options you suggested 

Each year during the annuity contract period if you decide to surrender the annuity you stand to give up and lose a certain amount.  

I would suggest not just dumping it all on the title company and expecting them to handle everything with no communication from you. 

Anyway, my suggestion would be to try and invest as close as possible, even if it's a 2 hour drive away. 

Use the spreadsheet that I suggested above to see exactly what the effect of principal pay down is.

But since your using the VA Guarantee suggest you find a realtor in Chicago that is a fellow investor.

If so, any suggestions on what alternatives we should consider?

It the house stand alone or is it a row house.

This ^^^ Or just build the little wall and stand it up in place...attach to ceiling and floor, apply vapor barrier and then cement board.