Specifically asking about public safety, appreciation vs. cash flow thoughts, and complexity of building a local team (agent, property manager, general contractor).

The holes in the boards were there to hold the plaster (because they did not have spackle yet and still had to plaster), just like the wood lathe would. you can repair the cracks just like you would in drywall, i would recommend cleaning out all loose plaster, using a mesh tape and for the first coat some 45 minute easy sand, this product will dry fast and ready for you to put another coat of it or spackle on it, but you may want to solve why you got the cracks in the first place before repairing, usually something needs re supporting. the wire mesh you talk of in the corners can be cut with a sawzall or you can use a drywall hammer and chop it out at the corner ( if your aim is good ) this can be removed and easily patched then with the drywall, just make sure to wear gloves and safety glasses when doing so.

In general, big banks dont invest a lot in their mortgage arms because they arent all that profitable.

Also, indicate any safety nets, such as a solid W-2 income.

This is such a safety hazard it's not even funny!

Many cities allow short-term rentals of primary residences as long as certain conditions are met, such as obtaining a business license and meeting safety requirements.

No this is not them strong arming you.

It's a 5 year ARM loan package, 80% LTV (appraisal value, which is sweet).

They seem to offer DSCR loans even with a 30 year fixed, no ARM, at 6.49%.

5% down, 10 year ARM How did you add value to the deal?