He really has to tighten up his standards or this type of stuff will happen over and over again.

Fannie/Freddie allow up to 10, however, banks and lenders have what's called "overlays" which tighten up native fannie/freddie guidelines.There are some lenders who will follow the native fannie/freddie guidelines that allow up to 10 properties owned and financed this does not include 5+ multi family or commercial property.

Be sure to really familiarize yourself with the area, as it changes greatly block by block.I'm also curious as to whether the student housing market here is tightening, as a number of brand new student apartments have gone up, equipped with lots of amenities.

Because many people including myself have put together great resources in depth on their strategies.You outline looks good "generally" but honestly experience is the thing that will teach you to "tighten" it up.

I guess I should have said "flip" as it will be rented and used as an investment, but I plan to only hold them for 2-5 years which will be spent increasing the NOI, tightening up the expenses, and increasing its value.

If the house has a chimney which is not longer required, plug it.Once you have done the inexpensive to tighten the house, then you can consider changing fuels - here electricity, oil and gas are all about the same cost, but in many places in south in the U.S.A. gas is considerable cheaper.  

I truly understand that I have to invest in myself and I see the value in it, but i just dont want to put that kind of strain on myself and my family.

If banks keep their belt tightened, then it'll be harder for new construction and obviously buying a house which increases supply and lowers demand. 

Lenders, with all of their resources, are constantly trying to adjust to market moves and tighten credit, loosen lending guidelines, or invent new loan programs to serve a new market.Sellers are in a unique situation because the main asset in the transaction belongs to them.

The reasons I'm considering doing are the following: 1) I have already noticed some tightening taking place in the lending world.