This gave me the idea that doing something similar might help to alleviate the somewhat expensive cost of an apartment.

How would combining the two rooms upstairs into one alleviate that problem?

A landlord reference can help alleviate concerns about damage, cleanliness and whether they play well with others.For what it's worth, some housing authorities are easier to work with than others.

I mean I want to offer no money down, (and no cash), but then switching to offering 5% down to alleviate their worryAnother way of doing this I thought is that I could offer a handsome interest rate, like 8%, but in return I want only 5% down (and then for my own sale I could ensure there's no prepayment penalty just in case I want to pay it off/sell it in the future)

You could alleviate the issue with estoppel letters (letters to the tenants asking what the current terms are that they are living under, to include rent obviously, as well as other terms).

If the pitch or trap was in the wrong place I would hire a plumber to alleviate that situation first before insulating, then have the handyman patch up the drywall.

I think I will put some time into the letter so I am not degrading and just letting her know we are here to alleviate the headaches for her.

Once again, this isn't a problem in itself as some drainage can help alleviate the problem and generally isn't terribly expensive but if you are holding long term, I would ensure the issue is resolved.  

However; having a home built on the lot yourself would alleviate the risk considerably.

To alleviate your fear, use a Purchase and Sales Agreement that states that your earnest money is full liquidated damages if you the buyer do not perform.