Down payment of $13K including reserves sounds pretty low to me . ( Based on Maryland )

Based on conversations, I think it might be a little of #2.  

Because based on those answers, you can just get a conventional loan. 

Quote from @Dave Schimmels: What is a good way to get accurate rent comps with existing tenants based on the area?

I already run up expenses for my trading income on a credit card because Im responsible and its helpful when building credit, Im also on my families card or something of that nature, but at my age I am not entirely sure what the best course of action for credit building is any tips would be very helpful!

The analysis also reports that new multifamily development will “remain near the average recorded over the past five years”.Integra Realty Resources’ 2017 Commercial Real Estate Trends Report ranks Pittsburgh #2 on its Top Markets by Multifamily Transaction Volume Based on YoY Change.Pittsburgh’s rental vacancy rate has declined by 25% over the last five years.Pittsburgh is booming with developments (see reference #6), “there is no better place to be a developer right now than in Pittsburgh.

I trust his advise but I feel that its not worth taking a chance and I should ask her to politely leave based on the fact that she has lied on her application. 

Based on what you've said here, I'd probably rent it out as-is for a couple years and then 1031 in to a higher quality area. 

Our goal is to establish a structure where the property owner can secure financing based on the long-term lease with the operational company.Any advice or insights from those who have navigated similar situations would be greatly appreciated!

Based on my experience of running properties, even if the build were to cost you as much as $600k but you could generate $125k/year, you'd be very happy with that investment.