That quantity will be less painful with an unoccupancy. 

Should you meet with a lawyer or are generic online templates sufficient?

In some cases, quality over quantity is the way to go. 

Property management companies for the most part are all about the quantity of properties they have rather than the quality of properties and the quality of their property managers.

The income I make from my rented rooms is sufficient enough to cover the costs of the house (PITI, and utilities) plus extra profit.

You do still have the potential to purchase long-term rentals conventionally (because they'll count 75% of the income from the new acquisition) and to purchase short-term rentals where the appraised long-term rent is sufficient to offset your mortgage (this is harder because Airbnb properties are usually nicer than long-term rentals and, in turn, wouldn't make for great long-term rentals because they won't cash flow).  

Select your partners wisely - Realtor, Lender, 203k Consultant, and ContractorREALTOR - it's recommended to work with one that has done a 203k in the past so they know what verbiage HUD wants to be added to the purchase offer contract and how to structure the dealLender - advice you to select a lender with verified 203k experience; the lender is the quarterback in the process, controlling the rules, paperwork, processes, procedures, and if the lender does not have sufficient experience with the 203k, your entire process can look like the Cleveland Browns on a Sunday afternoon203k Consultant - the lender is responsible for selecting the 203k Consultant (refer to Lender paragraph above); this person determines the scope of work and pricing for the projectContractor - strongly advise you to select a Certified 203k Contractor; this person does not set the pricing (see 203k Consultant info above) but does need to know the different versions of the 203k, payment methods, timelines, paperwork, and processes; definitely don't want to work with a contractor who is going to "wing it" on a 203k.

I have a pre approval that includes 40k in rehab cost but I am unsure if this is a sufficient amount.

Theoretically it could benefit someone just starting who has a small portfolio and haven't built up sufficient cap ex right?

Just building in an OZ ZipCode isn't sufficient.