In addition to conventional loans and FHA loans, if either you or your wife are veterans, the VA also has a rehab program.I'd be happy to discuss my rehab experience both as an investor and as a mortgage broker, and at least help you think through your options. 

Your best route might be to buy a 2 to 4 unit property that you can live in and rent out the additional apartments.

Would be great to reconfigure the lot lines on the two additional parcels so they'd both meet the minimum to build.

Supplement this far simpler entity approach by ensuring you have appropriate types and levels of insurance, you operate your business in a manner in which your conduct is not considered an exclusion in your policy, you work with licensed and insured vendors, you execute contracts with indemnification clauses with these same vendors/ require additional insured status &  maintain appropriate licensing and permits.

Thanks for spotting that additional "real property" question. 

Additionally, since my parents are nearing the retirement age, I'd like to prioritize low-debt, high-cashflow deals.

Here are a few additional strategies that might help mitigate risk if you decide to rent the property:Hire a Strong Property Management Company: While you’ve already spoken with some PMs, consider finding one with extensive experience managing single-family rentals in Cook County specifically.

They offer a $10K repair fund to fix damages in addition to SD plus warranty for appliance repair etc.I have no say in whom they choose to move in, whether there are animals, limit on # of occupants etc. they reserve right to inspect property so i have no idea if they can tell me to remodel, paint etc.does this make sense i have a vacancy coming up in October (bad rental timing).

When its included in a lease for real estate then the laws pertaining to residential rental security deposits in your state apply but when its separate you should have more leeway to get some additional deposit to protect you.

IMO this is much too little additional return to put your personal residence at risk.