Before we sold it we hired a management company to reduce the burden, but even then we decided to sell and walk away. 

It is zoned single family but since the previous owner is using it as a rooming house a few things look different that I am worried about the appraiser not passing:Outside doors for each room with locks.The only common area is the kitchen, no dining room, living room, etc.The rooms consist of 5 bedrooms, 1 kitchen, and 2 bathrooms.Each room has a bed and a small drawer which I am thinking of diassembling before the appraiser comes.Would I have a problem with this?

After some additional research we have decided to focus on the aforementioned markets, but I will keep you in mind if we decide to look at Columbus more closely in the future. 

.)- The property should be appreciating, if purchased in a good location, increasing the owner's equity/wealth.- Rents will be paying the mortgage off, increasing the owner's equity/wealth.- If you hold a rental until death, you can pass it on with a stepped-up cost basis, limiting captial gains if then sold (limited by inheritance tax limitations).Too many newbies on this site trying to replace their day job income via "passive" real estate investing w/o digging deep enough to understand how it really works.

During the months of searching for the perfect property, his has decided to move out of state, closer to family.

The squeaky wheel wins in development so I'd recommend you staying on all communication with the city so that you can see the communication and push as the owner.

In speaking with our insurance agent, we decided not to make an offer.

Ask to speak with some of their current owners and current/former tenants.

Interest income is interest income, unless you decided to roll some of the current cash into a self directed IRA at which point your interest income would be deferred for a later time and allow your funds to grow tax free.

You will need to look at all the numbers in your underwriting spreadsheet (let me know if you need one) in both scenarios to decide.