There's a good chance the issue(s) you face has already been discussed and answered.Ask questions in the appropriate forum.

Would it break fair housing laws to say we are not willing to work with the program since it's not a source of income and they pay on their behalf?

You didn't say anything about whether the lease or local laws actaully allow you to do this. 

I dont want the money to become an issue but a by product of helping others ( scaling ). 

The seller is not very tech savvy and is going through some life issues so he isn't being very helpful in this.

Anyone else having issues?

Unfortuantely, things happen that are out of your control.The insurance issue is such an important takeaway.

With the income issue, there are screening systems available that verify income by having applicants securely log in to their payroll provider, which then shares their gross and net income with you.

@William Causey depends on the transaction and the parties involved.Agree with @Dennis McNeely on some of the transaction costs.A different issue though is with an Assignment, the buyer gets to see what you paid for the property.

Keeping your license and avoiding any legal issues is probably worth more than this one transaction.