Just like Mehran Kamari (podcast episode 72), I live in LA and would like to start investing in buy & hold rental properties, but the math simply doesn't seem to work here.

I"m going that route now...You will do great;  just do your homework!

I’m doing my homework so I’m absolutely ready on every possible detail! 

It is really just using simple math to figure it out!

In your math at the end you talked about tax, interest, etc. your $1500 mortgage payment will include those as well as insurance.

I work on Wall St and never took a math class in college. 

Chicago is an awesome city but as @Crystal Smith mentioned, it has 77 neighborhoods and each one is a bit unique so you'll definitely want to do your homework.

People going to get food, gas, entertainment before they pay that 500....you collecting the additional rent  the reason hotels that rent by the week kill it is there are 54 weeks in a year .. there are only 48 weeks in a 12 month rental.. you pick up one extra month of rent.. tenants usually dont do the math but make sure your rental agreements is per 2 weeks not monthly rent..

Best to do your homework before you buy.http://www.thecb.state.tx.us/reports/PDF/9054.PDF?

The cap rate of a boarding house should be WAY higher than is typical for market because of high turnover and vacancy and because of high management costs/effort.Have you punched all the numbers in the rental calculator and done your own math on it?