My biggest question I always get asked after I explain it to them before lease signing is the no pet policy.   

Your primary insurance policy with $300,000 in liability coverage should be sufficient in 99.999% of all lawsuits.5.

The challenge when renting directly to the government is that they expect below market rents.From what I've read in the past, most institutional investors look at these leases like US Treasury Bonds (extremely low risk) and expect a similar rate of return as bonds.Keep this in mind while you try to negotiate a rent increase.

Major water damage in my investment property from a sudden pipe burst there was some other damage from a break inand had a previous break itI have max 160k  insurance payout.It is a builders risk policy for house flipping.

Here (and I'm assuming in most places), the condo association governs STR restrictions, not the local/county governments.

Do they have an extension policy? 

When you do any agency loan (conventional or government) as a Primary Residence, you are signing a new 1 year "occupancy clause".

We also have a strict policy that anyone 18 or older living on the premises must be properly screened and approved. 

Do you know if there's a government agency I should contact about regulations for group homes? 

But as a matter of policy, I just tell everyone that actually applied (that I didn't pick) that I rented the apartment to "another qualified candidate".