Are there infrastructure limitations, i.e. main sewer can't support 100 new townhomes feeding into it?  

Maybe even failure to take full advantage of an opportunity, resulting in a loss of potential profit or benefit.

Limiting issues and liability is the goal.

Compare that to Vegas, where rules can be restrictive and condo-hotels often come with sky-high fees or limits on how you can use your property.

Did they only cover this cost once the eviction process was complete and the final loss was assessed? 

This can lead to consistent limit increases every quarter, which opens up even more opportunities for growth.Having good rapport or a strong relationship with a credible accountant to help simplify and oversee this process is an amazing idea and highly recommended.

I believe it tends to give me a slightly lower return, because the sponsor is going to be more careful, and if there is a severe downturn will prevent me from taking catastrophic losses.

If the bank is imposing some limitation on the buyer (e.g., it cannot be the borrower), then what you're trying to do may be to circumvent some limitation.

Especially in eastern PA where competition and inventory can be tough.If you have 80K, spending 60-65 max should be your limit.

They can limit what property owners can do, including house hacking.Even if the city has no restrictions, if legally binding and properly recorded, covenants can enforce rules that supersede local ordinances for those living within the neighborhood.