One downside of MF can be the age, and insurance can be a big issue.

If the house doesn't pass the occupancy inspection before closing, the municipality can usually issue a temporary occupancy permit.

I ran into the same issue.

I know conventional lending could become an issue depending on the condition of the property.

Unless you negotiate a new contract or addendum with your PMC, they do NOT have to abide by any requests/demands you make that contradict what's written in the management contract.If they have in fact NOT followed the terms of their contract, then you'll want to send them something in writing pointing out the specific language in their contract that they violated and ask what they plan to do about it.If they fail to correct or address the issues, then you'll want to start looking for a new PMC.

The issue I see is that market has historical appreciation below average (not bad, but slightly poor).  

Are you aware of some actual legal authority that validates the IRS opinion on this issue?

The challenge with S8 in this scenario is you always have a piano over your head and all a tenant has to do is call the code office to create an issue for you. 

I doubt if you'll have any issue with your hold period since it is all about your intent anyway.

Compliance states there is no way to remediate this unless a new file is created. lender credit is 6900 which is the seller concession and no COC can be issued for “incorrect” lender credits.