Best thing to do is avoid the higher DTI debt to income, claim one as investment and use the rents to offset the new purchase. 

I consulted with a real estate lawyer a few times this year who said it's very hard to sue for negligence and they advised against taking legal action, especially since the property manager at least followed through on the eviction and repairs.I've now asked the property management company to apply a $4k credit for all the challenges I've had working with them.

If a guest stays for one week in July, the owner can't legally rent to another guest until August and must leave their unit vacant for three weeks.

Quote from @Aaron Zimmerman: I would look for other ways to legally reduce income such as cost segregation studies.

I have done extensive research in the risks, how to structure such deals to mitigate those risks as effectively as possible, and legal considerations of each strategy. 

If you don't sign the contract and hire that agent, then they legally shouldn't be working for you.

Usually draw fees are very minimal though and if you plan them right, it can be a great way to replenish your cash or pay down debt from rehab.

Everything you said is exactly why-- debt levels, market demand, associated costs(taxes & insurance).

NO debt NO debt NO debt on rentals is the way to go as you mature in age as an investors.

Further, the property may qualify for larger loans based on the increased cash flow ability to service debt.