Furthmore, if this investment property is ever audited it will look as if I'm hiding income..

If your audited by the IRS or your state, you'll want clean a clean accounting trail showing your income and expenses.  

I've been audited, but I do actually live in them before I rent out. 

Our loan auditing process which would include a new appraisal with an acceptable variance of said 10%. 

Business tenants will audit this reconciliation and push back on charges they don't think they want to pay.I could go on about more of the differences and what is involved with commercial property management but then I'd have to charge you hourly for consulting fees ;).Concepts for you to research: CAM, CAM reconciliation, gross leases, net leases, E&O insurance, service contracts, trust fund accounting, MRI, Yardi, and local licensing laws.Not a lawyer or tax professional, the above is just my opinion and not advice.

The bank was audited and since I had a rental insurance policy on the property they questioned why I wasn't living in it.

The purpose I believe is to have a more experienced managing broker audit your contracts written over the 1st 2 years.

Management fee is 7% of the monthly budget at $13,000.The Property Managers/ HOA Board does not contract an independent CPA/ accounting firm to generate audited financials, which is a problem.

I may not be impartial on this subject but I think that one of the best ways to get started in real estate investing is to rehab a house that you are going to live in.

Joel,Yes, tax, accounting and audit representation is my niche.