But it really gets serious with how you handle showings, your application, how you conduct tenant screening, credit / background checks and your communication style throughout all of this.

It doesn't matter - You as the big bad rich landlord have a target on your back and will be named to the lawsuit and your insurance carrier will rush to settle it quickly and then you'll be dealing with the long term challenges of having that claim in your insurance history. 

For example, I mention that every adult must pay a $30 application fee, pass my credit/criminal background, make a combined income of 3x the rent, and whether or not the property accepts pets.

Here is some additional information to ensure success:First, tenant screening is critical, focus on creditworthiness, rental history, and stable income.

Ideally, this line of credit would be structured at a set interest rate with interest only payments for a period of 60 months.

There are banks out there that offer lines of credit for GP stakes, which many established syndicators utilize and draw on to potentially fund their follow-on offerings.  

Something like he agrees to flush more often and for every month with no back up I credit his rent $25.  

I recently explored several top mortgage companies to hang my NMLS mortgage license with and if you have decent credit and a down payment, banks are finding ways to get you qualified.

We want to use that money for a home and we live in NY and probably cant get anything unless we get more income and  bit better credit.

Do you even have the capital or track history to take down multi family?