I've talked to other lenders and the 6.5% with 0 points doesn't seem unreasonable for my situation.

Its not unreasonable to ask for deployment papers. 

Also most of these properties qualify for a 203k loan which is an excellent loan option for an owner occupant though these loans aren't without their own set of hurdles and red tape.

There are a couple of hurdles with financing a wholesale deal.One is that, if you're double closing, you're buying from someone who doesn't own the property. 

@Paul OBryan, after researching this issue,  I don't see an easy or ethical way around California's unreasonable definition of doing business in the state. 

If I do find an insurance provider who agrees with my thesis, I suppose the next hurdle is making sure the lender also agrees. 

I have 1-2 months for rehab and then time for placing a tenant, so it comes pretty soon after so its not a unreasonable wait.

If the days on market is around 50-60-90 days, then at +150 there is a big problem with the pricing or the seller is unreasonably holding out for a specific sales number that isn't coming.How is the price of a home determined?

Am I being unreasonable?

If this tenant was able to make a 12 month commitment in the first place, it doesn't seem unreasonable to expect the same upon renewal.