If you're up to the work and are patient, this is a great way to add value and also increase your inventory (which isn't abundant right now). 

An IRA contribution can help mitigate the tax bite but not much.But I get your real issue - you are wanting to eliminate debt not increase the portfolio. 

The policies issued by NFIP and the WYO companies are standard and should give you worst case scenario for the cost. 

@Devin LondoI am not in Chicago, but also work in a competitive market that has high property value increases every year.

Home prices:  Even though home prices have increased significantly in these areas, I have not ramped down.  

I know part of it was an increase of interest rate, but I think it is more of a market speculation where most people believe the market is inflated at the moment and wait for an adjustment.

I found this very interesting article about Airbnb in Tucson that I thought it would be of interest to investors who are having intention to start their Airbnb business:Original Article Courtesy of Carol Ann Alaimo of tucson.comShort-term vacation rentals a multimillion-dollar industry in TucsonBusiness is booming in the land of sunshine and saguaros for those who rent to tourists through a popular online booking platform.Tucson property owners collectively took in more than $8 million from Airbnb rentals last year and demand continues to soar in the run-up to the city’s annual gem show.About 53,000 visitors stayed at local Airbnb properties in 2017, a 73 percent increase from the year prior when about 30,500 did so, said Laura Rillos, a spokeswoman for the San Francisco-based company.Total rental income for participating Tucson property owners jumped from $5.1 million in 2016 to $8.4 million last year, Rillos said.The short-term rental trend has been good for the local economy because it serves those who otherwise might not come, said Dan Gibson, a spokesman for Visit Tucson, the city’s tourism bureau.That’s especially true during peak periods when local hotels tend to sell out, such as during the gem show or homecoming weekend at the University of Arizona, he said.

Plus the bank is tacking on fees and costs every day which increases the amount they wIll be willing sell it for.

There are abandoned warehouses nearby and there is a plan already to turn one into a brewery, so I think the value of the area will continue to increase over the next few years. 

This also means that with a larger down payment, the monthly debt service is less, thus increasing cash flow.