There are people here on BP who advertise "wholesale" properties right here in DFW with fictionalized ARV's and understated rehab costs.  

Not just investors, but people who should know better too (cough Zillow cough) when they present cost of ownership ratios that seriously understate the cost of operating a property.

Forget the entire train of thought you have and understand the obligations of a lender and the purpose of collateral under state and federal laws.

They have to understate the expenses and overstate the returns to market their deals to newbies.  

Right after posting this thread I went on Amazon and found a couple promising looking guides:http://www.amazon.com/How-Your-House-Works-Underst...http://www.amazon.com/Visual-Handbook-Building-Rem...http://www.amazon.com/Complete-Photo-Guide-Home-Re...

Just because an attorney wrote or looked over the lease does not mean it is a good lease, is enforceable under state law, etc.

Building your own projections with what your realities will be is the only way to conduct due diligence on a property (ie property taxes based on a new assessed value, insurance, etc) As you stated, your financing scenario can turn a great deal into no deal pretty quickly.Further, it's safe to always assume that expenses are understated, even if it looks like the seller's due diligence package looks complete.

Single family units are generally exempt from age and occupancy requirements at that level but generally will come under state and municipal codes being the same or more stringent.

As I am sure you will find that the easiest part of the project is the rehab(which is probably understated).

Note that in many cases, expenses are under-stated by the seller because it makes their property look like it is worth more so they can sell it for more!