There are more nuances to investor loans than for primary residences.

I bought a property where the current numbers don’t make exact sense, but it’s my personal residence and cheaper than renting for me even in todays market.

He is actually VERY qualified and gave you great advice that you initially were going to ignore:(3) Understand that no matter what property you buy, you are buying someone else's problems.

A couple hours after I approved their application, another person that actually does qualify and has all funds available now applied.

If not, that's my recommendation.Some of your improvements may qualify for depreciation in addition to your building value depending on the scenario.

My focus was on 5 qualified buyers at all times and looking for seller leads. 

However dependent upon taxable income you could get away with a pretty low tax bill due to favorable capital gains tax rates.Be sure to work with a qualified intermediary and a tax professional to ensure you comply with all 1031 exchange regulations and to be sure you keep basis correct as all a 1031 does is defer your gain.Happy to help run some numbers or do some basic analysis for you if you would like. 

I actually worked with a client in Phoenix not too long ago who was in a similar boat...trying to transfer their loan to a buyer looking to use the property as a primary residence.

This usually occurs if the buyer “qualifies” for the loan and an incentive - higher interest rates, transfer fees, etc. to the lender is provided.  3 - the parties entering into  a transaction, take steps to conduct business in a way that doesn’t “alert” the lender to the fact that the property ownership has transferred.  

My primary residence also has an apartment I am preparing as an STR.