The way the proposal is written, it will limit the average investor instead and the type of investment (i.e. no alternative investments), reduce diversification, increase risk, and limit hard working savers ability to save for retirement. 

At the end of the day you've taken action to correct the situation and if the tenant thinks it's a health risk then they should move to reduce continued exposure....at least that seems like the common sense move.Disclaimer: Although I stayed at a Holiday Inn, I'm not a lawyer.

Took extra attention when writing my lease agreement and reviewing applications to find renters that behave like homeowners (require them to mow their own lawn to avoid lawn care expenses, all utilities except for sewer/trash are tenant responsibility) which has paid dividends in reducing headaches and keeping time spent on management to a minimum.

Just for a reference we do charge smaller portfolio owners the full 10% because it is quite a bit of work doing all the reporting on just a couple of units and time does not scale well, however as they grow our fee gets reduced.

The other option would be to reduce your criteria to either a SFH, duplex, or triplex depending on the price, and still take advantage of the FHA loan.

@John Kunick seems like he’ll be reducing his prospective renter pool quite a bit.

It also requires you to reduce the interest rate by at least .5%. 

Since any renovations are unlikely to add value to the property, based on this discussion and thinking it through, I'm going to calculate ROI based on a 15 year holding period, looking at what reduces maintenance, risk, and helps keep rents at the level I want.  

To refi an investment in Texas is fairly straight forward if you are doing a rate and term to reduce the payment amount. 

But if the borrower pays off the $120 (likely less since payments being made for a few years reduce the UPB), it's still greater than the initial $60k so do you consider that like a sale and just caulk it up to capital gain?