Most occupied property insurance policies will cover "vandalism and malicious mischief" but there are different forms of policies so you'll have to ask.

To cover all costs outside piti?  

It is zoned single family but since the previous owner is using it as a rooming house a few things look different that I am worried about the appraiser not passing:Outside doors for each room with locks.The only common area is the kitchen, no dining room, living room, etc.The rooms consist of 5 bedrooms, 1 kitchen, and 2 bathrooms.Each room has a bed and a small drawer which I am thinking of diassembling before the appraiser comes.Would I have a problem with this?

The generally equates to a tiny 3 bed 1 bath home that is in need of renovation, and either no basement or unfinished.

Just make sure the bed/bath count is correct as it can affect the income drastically 

The carpets covering the stairs are matted down, stained, and especially smelly.

The property listed for 200k, so we talked them down to 190k and they are covering 2k of down payment.

For example, you might choose to take a blanket mortgage covering all properties, BUT perhaps the market softens and later you wish to sell a property.

Can try to reposition to Class B, but neighborhood may impede these efforts.Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years.

Can try to reposition to Class B, but neighborhood may impede these efforts.Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years.