Make sure to verify during your final walkthrough.Talk to your attorney about the specific requirements in the handling of security deposits, as Chicago has very strict laws regarding security deposits.

Should I underwrite this as a strict 4 unit, and call the 5th the icing on the cake?

Each state is different, some states wouldn't even allow you to collect this money upfront as they are very strict about how many months worth of rent, and how much of a security deposit you can collect.Other than that I would just open a seperate checking account at the bank in your name or the name of your LLC and deposit this money into it. 

As Spencer also notes, most condos here are in strict HOA environments, which adds rules and complexity to renting rooms.

They would certainly not have any fiduciary duty to the buyer but they would, if they were Realtors - not Real Estate Agents - be bound by a strict Code of Ethics as set down by the National Association of Realtors - and in the Code of Ethics;REALTORS® shall not, however, be obligated to discover latent defects in the property, to advise on matters outside the scope of their real estate license, or to disclose facts which are confidential under the scope of agency or non-agency relationships as defined by state law.

The Net Sale Price is computed by taking your Gross Sale Price ($660,000) and subtracting your routine “permissible selling expenses.”

Is your criteria too strict?

So my plan for about the next year is to strictly educate myself by reading to books, listening to podcasts, utilizing BP, etc.

HOA fees usually go up annually taking away from your ROI.I always plan to convert garages to bedrooms/units and the townhomes here in California strictly do not allow it at all.With this being said, there are several BP investors who are immensely successful investing in townhomes, everyone has their own niche

Routine Maintenance - Do you have someone local that does cleaning of common areas, who could at least check the dryer lent trap, and clean it, and the laundry area?