I think their logic was that a family with 12 people (parents and 10 boy children) would have difficulty finding a suitable house with say 6 bedrooms.In addition to the Federal guideline, some local ordinances address occupants both tenants and owners. 

Here's how I'd suggest proceeding: - Make it clear in the listing what your requirements are for Credit, Criminal, Credit, and Eviction.

It also helps to identify how much capital, or access to capital, you have. 

Now, you need to figure out how to find deals and pay for them.

from a laptop or mobile phone on one of my SFR's (internet must be hooked up, but most tenants do it anyway and like to be able to monitor the outside of the house remotely, even if there's nothing going on.)

You'd want to work with the REIT sponsor and your CPA to understand the expected timeline for this a bit more.  

I really want to do an apartment building but i want to build a track record first of smaller deals and just looking for a strategy to get into deals similar to a subto or wrap.whats an agency loan?

Quote from @Jaycee Greene: A few things I noticed, in addition to having the tenant pay the utilities are:1) Incorporate annual increases in rent higher than 2% (in your area, maybe 4%-5%) with a slightly smaller increase in operating expenses (say 2%-3%)2) With a gut rehab, I'm not sure why you need to spend $128/month on cap ex, at least for the first year or 2.3a) An 80% cash out refi is probably going to be hard to get.

Ask how many units they manage and how much experience they have.

Going to give this a listen and get back with you.