The result could be limited, no rent growth or even rent decreases.

If the property was misrepresented in the sale documents, there could be grounds for legal recourse, though this might be more challenging after the rehab.In a similar situation, I’ve seen investors focus on maximizing their returns by operating within the legal limits (e.g., as a single-family or duplex) while still exploring long-term solutions with the city.

You've listed the "big three", and those are all that are needed for most MTRs, especially if you have a limited number of doors in an area.

Yes Ive done a free months rent is lease signed by X date before

Failure to meet material participation rules will limit rental losses to offsetting passive income or carrying forward.This post does not create a CPA-Client relationship.

We have offered to allow her to pay a reduced rent for the first few months as well but I am worried that may create some sort of limit on how much we can raise the rent on her in the future.

What I can share is that the risk-reward will not be worth it as a 'newbie' due to your limited capital and inability to actively manage your properties. 

As used in this Section 18, "Interest in the Property" means any legal or beneficial interest in the Property, including, but not limited to, those beneficial intereststransferred in a bond for deed, contract for deed, installment sales contract or escrow agreement, the intent of which is the transfer of title by Borrower at a future date to purchaser.If all or any part of the Property or any Interest in the Property is sold or transferred

The house is a foreclosure so we cannot extend closing date.

The advantage is that rehab loans are based on the value of your home after the improvements.Since Home 1 will be the quickest to move on, please DM me the state where Home 1 is located, the purchase price and how much you have spent on rehabs to-date.