I have some properties of Seneca street and the housing prices are increasing but I’m not seeing much growth in the area as far as new business, development, etc. what’s your input on that? 

Values have increased significantly in recent years as higher density development has pushed further from downtown.

How do you account for increases in property taxes (Chicago is more than likely going to increase taxes for the next few years)?

Have you talked to your insurance broker about increasing the deductible?

Or, I could use all or some of that cash as a down payment on a place here in CO, but I worry that the market here is increasing at rate that it cannot maintain.

Not only is it a mental and emotional victory, but it increases your cash flow.

For moving there as a primary it depends on what you are used to but for investment purposes depending on where you are there's forms of increased development and is a marked for gentrification.

Or even just getting her roommates in a house with a layout she’d be comfortable with enough privacy. 

This choice changes the situation for the lender into an equity partnership which increases their risk, which deserves a higher reward, in equity, cashflow and sale.In any case the lender should be on title (like a bank would) to secure some or any colateral.I am a multifamily real estate business owner and not a legal expert, therefore any agreement should be drawn up and executed by an attorney specialized in your field.

In fact, this does increase their tax bill because of the interest on the loan.