I personally wanted to do a 4 plex in a war zone for 2 years, but my wife wanted a single family home...the duplex was our compromise and it has worked out well for us. 

House is on septic, I’m sure this plays a part into this. 2) would this non-permitted situation compromise our finance plans?

Renting to your friends will just put you in a compromising position where you are forced to make inappropriate business decisions based on emotion rather than the most financially responsible way to run your business. 

Independence is compromised when a borrower recommends an appraiser or a person to perform an evaluation.

-Formal asbestos testing protocol-Working with architects and engineers -Removing trees and "politics" associated with it, even if the trees are compromising the houseMore to come!

Coded as either poor or sealed/structurally compromised condition, owned for 30+ years, tax delinquent, mailing address different from property address.)

You're looking for any large deferred CAP EX items, anything that compromises the structurally integrity of the home and anything that is a safety hazard. 

Rads may also be compromised especially the vent valves depending on steam vs hydronic.

I offered a potential compromise in the comments section that maybe they are projecting future rent increases or making appreciation plays, but they reiterated their opinion that "conventional wisdom" points to owning rentals in the highest price to rent ratio markets available for cash flow investors. 

Don't compromise on that!