They are at school away from their parents, they sure as hell don’t want to move into an apartment with their landlord right there telling them no parties.

As an FHA borrower you will have to live in a unit; therefore it would have to be close to work/school etc etc. 

I would say partner with someone, but it doesn't sound like you're a contractor... maybe look into trade schools and find a side gig? 

It was rented out, but the owner isn't able to show any rent history on it since he wanted to avoid paying taxes.

It’s my understanding that pro schools is now OnlineEd... but I will look into them and see if maybe they are comparable.

Which school is the best? 

I am assuming that I can't lease the initial units in August for the fall school term, then walk into a bank in September and say, "Look, we're at 100% occupancy and cash flowing, please convert my short-term debt into a long-term loan, and also I need more money for phase 2."

(D) "Institution of higher education" includes all of the following:(1) A state institution of higher education, as defined in section 3345.011 of the Revised Code;(2) A nonprofit institution issued a certificate of authorization under Chapter 1713. of the Revised Code ;(3) A private institution exempt from regulation under Chapter 3332. of the Revised Code, as prescribed in section 3333.046 of the Revised Code.(4) An institution with a certificate of registration from the state board of career colleges and schools under Chapter 3332. of the Revised Code that is approved to offer degree programs in accordance with section 3332.05 of the Revised Code.

My understanding is that as long as the garage is attached, it can be modified in such a way.For a bit of background, I am planning to start grad school in the fall of 2020 and will likely end up in Portland or Denver, both pretty expensive cities.

There are plenty of areas that make sense in the Chicago land areas for single family rentals, but they typically are not located close to the city, in the top school districts, etc.