So I guess my options are to Rent out our Paid Off home and use an FHA or 203k loan to buy our next home(for a hell of a deal of course) or should I just take a loan out to buy a rental home and stay put?

His business was grossly mismanaged the building almost went to auction for taxes this month, so I guess the next step is to see if I can get a copy of the returns to a CPA to see if there is any depreciation left, or if he mismanaged those as bad as he did everything else, and left all the meat on the bone.

So, I am guessing if you have a family, your insurance will run around 15-16k a year.

If you are over in the waukegan area schools, I would guess some of this may be higher given that rents are lower and that can cause different types of tenants to have to rent to.For my single family investment, I just use a simple repairs, cap ex, vacancy expense. 

I guess he was brought an offer and knew we had an interest if ever the opportunity presented itself.

well, BRRRR is usually a rental cash flow play... but if it is pretty much a wash monthly... then it works I guess for appreciation too... just a lot of risk for vacancy at that price point...  

I guess it truly comes down to if I live with my roommmates in a home closer to downtown (which I would enjoy as well); I would have more control of the tenants as they are my college roommates and long time friends.  

@Joey BiccumI would venture to guess that anyone in your area who chooses to rent a place to live for $1900/month has made multiple housing decisions about their lifestyle that are unconnected to any sort of poverty they are experiencing.

My guess is that this may have happened: we've had sub-4% mortgage rates for approx 10 yrs.

I am guessing not much.