This is what I would do in your situation:Of course, not knowing the personalities and temperaments of the people involved, I'm at a disadvantage.

Just do the normal annual rent increase and he should be more than happy as a "good tenant".M2M is best option for a landlords and has no disadvantage to a good tenant.

If there's a bodyshop next door, is it an advantage or disadvantage?

I do not have time to put in a lot of work into the houses which I think I am at a disadvantage from. 

And if you are a newer  investor, syndications allow you to hire a manager that has infinitely more experience and knowledge than you can ever hope to gain (and thus avoid newbie mistakes).The biggest disadvantage with syndications is that you have to be able to feel comfortable with vetting and choosing a manager that will have full control.

What are the disadvantages to buying it and NOT having it retro permitted?

Property needs to be in your name, not LLC.Speaking of LLC's: in my opinion a bit overrated to start out, as there are better ways to minigate your risk and avoid certain disadvantages such as commercial financing.

In a market like we've been in where multi-family properties are hot, FHA puts you at a bit of a disadvantage due to the requirement by HUD that the property be in move-in condition.

Remember, the person that's going to attack someone already has a plan plotted out and even possibly someone with them hiding out,so you're at a huge disadvantage.  

There are advantages and disadvantages for every type of asset.