Past operating history is irrelevant.  

I explain they will have difficulty Renting a quality unit, that I will ding their credit, that I will attempt to garnish their future income to recover what they owe.

Using a company to do rent reporting to Credit Bureaus is a good idea to prevent the delinquency in the first place and at least increase leverage to recover the unpaid rent after it has happened.

However, if the seller is giving you a credit they might lend off the price net of that credit.As for the balloon payment that shouldn't be a problem if you sell the home, which I imagine is the end goal?

If anyone will do this, it will likely be a small local bank or credit union that you have a banking relationship with.

This is all dependent on your credit score, property type, etc.

If you rented by the room, then no - Conventional typically does not allow for boarder income in properties that have not yet been placed into service (meaning you dont have rental income history on a tax return for that property).

Before I paid $800 for an apprasial I wanted to make sure they would lend without prior rental history.

I offered a credit to the buyer to repair the attic.

Even if you use an outside PML, silent seconds and business credit to “show” liquidity to close.