From everything I know about US RE the returns should be much higher, but maybe certain markets has lower returns.

I've done my comps along with the ones that she provided, and they come in over $100k lower than the stated ARV.

Then I hear about this thing called a Home Equity Loan that, right now, would be paid back at a lower rate than 7%.Let's say I can get the cash together to outright buy the house and then take out a home equity loan at a lower rate than the banks are offering me for a mortgage on a rental property.This sounds like a good way to buy a property and pay a lower rate... but I haven't heard too much about people doing this so it makes me think that there are better ways to use the money that is put into buying that house...What are some considerations that need to be made?

Basically it's set up as 2 condos instead of a multi-family so no one could get a mortgage to purchase the whole thing.We were able to come in with a substantially lower bid since we can pay cash. 

I don't know Auburn at all but prices seem way lower there than the west side of syracuse.As to your concern about success rate, not sure where that number comes from but I have not had any more trouble renting units in the city or out so that feels like a red herring to me.

I'm looking to house hack my first property, and I'm not sure if I should find a 2 or 3 flat in Chicago area where it's more expensive and what I can afford will definitely need more work then I would like, or buy a multifamily property is a suburb where I can find a property in better shape and perhaps at a lower price with a lower mortgage .

In the past, the FMR has usually been lower than local rents, but with the spike in residents and the popularity of Nashville, sales, rents and property values have skyrocketed, as I am sure you are aware.

If not, you will find that your $293 "cash flow" is a lot lower than you think it is. 

I could cash out refi but I would much rather keep the lower payment.

A C-corp traditionally has been a poor vehicle for rental real estate but now with a lower 21% tax rate, is becoming a better alternative, especially compared to an LLC which can be taxed as high as a 37% individual rate since LLCs are pass-through entities.