Three employees in a nice single-family home with full kitchen, laundry, all utilities, privacy, etc. for about 1/2 what a hotel would cost and less than a typical vacation rental.

There are some other small value add plays I saw with that building though, such as converting the laundry room to coin-operated units and adding more storage/converting the garage. 

Moreso than me trying to rewire a laundry room or shingle a roof! 

So the mortgage insurance is kind of a wash from a monthly difference, leaving us to decide on which loan type to choose.

It has original windows, front patio needs pressure washing, and the landscape is simply grass up to the house.

Is laundry not in the unit common? 

That would make the 1st year a wash which is why I’m not sure about the deal.Should I:A) Add $4500 to the asking price and recalculate my numbers?

Also they will have meal costs, laundry costs, etc.

I've sold HUD Homes (as the buyer's agent) where the buyer's FHA appraiser required new floor coverings, new paint, roof inspections, a bathroom remodel, and a whole laundry list of repairs to meet the PCRs prior to closing. 

Without knowing much about your local area, the exterior condition and MEP systems in the house I'll make the following suggestions so take with a grain of salt ;) First, I'd wash those walls and repaint most of the rooms a clean white or something neutral.