I encountered this when I started house hacking. 

I had an average mindset on finances (did not encounter the idea of having my money make me more money). 

The scenario you are describing is just one of dozens you will continue to encounter over and over and over again.

This type of financing is traditionally for 1-4 unit properties, but a couple of the Big-5 were/are underwriting 5-6 unit properties with residential lending (this is their attempt to target an area where commercial lenders will not lend).One challenge you will encounter with smaller commercial properties (5/6 to 10/12) units is the deal size may be considered too small by many {commercial} lenders who are not usually interested in underwriting financing less than $1-2M.An option would be to approach a credit union as they frequently underwrite any rental property with commercial lending and will look at smaller deals.When you do finance a property commercially, while the debt will not be registered against your personal credit, the lender will want to confirm your financial house is in order and you are not personally leveraged too much.  

Has anyone encountered this and/or have advice for me? 

If you haven't already done so, then you probably want to have an electrician and a structural engineer inspect the property to evaluate any further issues that you might encounter. 

When you are first starting out, you are likely to encounter some of these poor handymen if you employ handymen versus licensed contractors.Note my state has a maximum cost project that a handyman is allowed to do without being an employee. 

I have many out of state investors reach out to me looking to do STRs in the area and then get sticker shock on how expensive it is to get into.You are looking at a $500k starting price on a one bedroom in an STR eligible zone.For a 3 bedroom attached unit the least expensive property I've seen is $775k.

What problems can we expect to encounter ?

Perhaps some banks have different rules, but I have always encountered loan officers who require rent rolls to have been on the book for 2 years before counting them in the income to debt ratios, so you may not be able to use expected rents.That said, if you are newer to the investment landscape, and this is your first or second rental, you shouldn't have an issue getting a competitive loan on a primary residence and converting your current primary into a rental.