In this town, especially this neighborhood, there just isn't many 2 story houses. and there are about 14 houses sold within the last 9 month but most all of these are average 1800 sq ft.

Rent prices for each of the units are above the average for this area for that reason, but maybe that's too idealistic for this C-neighborhood.

Whatever direction you go, don't buy in cheap, low end neighborhoods just because they are affordable. 

If you have a nice place in a good neighborhood and get the right tenant, then it won't take much of your time. 

For instance, I had a property owner contact me who used a "discount brokerage," which shall remain unnamed, and their property sat on the market literally 8 times longer than it took for the longest listed house in his neighborhood to sell. 

If you are flipping 3/2 homes in a specific neighborhood, find all the homes that meat that criteria and target them.

Back to the first point, paying more than a neighborhood is worth is OK as long as you realize that is what you are doing.

If it is an opportunity available to you then you should strongly look into how best to make it work for you.As for many of your other questions, there is no one size fits all answer.

Chicago is a city of neighborhoods and each neighborhood has different ROI and values within the city. 

I generated a list that I run though to make sure they will fit the team.