We manage properties in the Indianapolis, IN area. 

Cities like Columbus, Indianapolis, and Kansas City come to mind.

They might not always make the best decisions, resulting in failures, but some of those decisions were driven by bad data (whether from the borrower, appraiser, inspector, or whoever).  

(Approach - 2) - He says that if he is asked to pull permits, he is not responsible for any additional work that the inspector may throw (basically more money out of my pocket on the rehab costs).

When I bought my first and second rental properties in Indianapolis while I was living in California, I initially purchased them under my name to secure personal mortgage loans.

My wife and I have been investing here since 2015- we do several flips a year and have 20 rental units we self-manage.I'm a licensed Home Inspector and licensed General Contractor. 20 years in the trades.

Note that most all lead inspectors will do dust swipes (Lead Safe tests), but not all have the equipment required to do Lead Free testing so be sure you're specific in what you ask for. 

Backup plan, go to work for the city building inspections department or a third party inspector contracting for the county.#4.

I am in the Indianapolis area which has the same Midwestern feel but much more economic diversity. 

Now we have to submit the plans and apply for a permit and have an inspector come out to review the conversion from 30+ years ago