The REPS-9 election prohibits grouping short-term and long-term rentals, emphasizing the need for careful strategic planning.

I just read a post where someone purchased a STR in a town that recently prohibited STR. 

When I got back, I realized it was in a flood zone and the FEMA 50% rule would prohibit the rehab we needed to do.

That way I don't have to worry that something would prohibit me from having a house on the property, it is already there and I own it once the deed is titled to my LLC.There will not be an ingress running through the middle of my house.I also do not have to foreclose on  tax deed or tax lien.

Are there any property conditions that would prohibit approval of this loan?

This loan type has a prepayment penalty unless you buy it down or the property is in a state that has certain rules (sometimes lenders prohibit them in certain states and you're forced to buy it out, which will increase your interest rate).

And if nothing is in the lease stating that smoking is prohibited, smoke smell falls more under the umbrella of “ normal wear and use”.

More on prohibited transactions here:https://www.irs.gov/retirement-plans/plan-participant-employ...Don't be disappointed, however.

I am also willing to bet you dinner somewhere that the loan docs on the underlying mortgage have somekind of prohibition on doing exactly what is being done. 

Yes, you can rent by the room no matter how many bedrooms you have unless for some reason your local jurisdiction prohibits it.