That could be a good opportunity, but underwriting of a seller-financed fix-and-flip deal requires careful analysis.

And THEN, the same $1 fee is required when doing a transfer to pay me their utility bills, so then I discounted those by $1 too.

Majority of the houses are old and require frequent repairs in addition to a poor tenant base that can't pay on time and don't care about their credit.

If you don't have a key, change the doorknob to an appropriate interior knob that doesn't require a key.I provide my tenants with keys to all doors.

We require them for any tenant over 18 years old.

Low cash flow requires larger reserves.  

That is often a matter of opinion and will depend on the attitude of your municipality.Most municipalities do not require neighborhood approval, but will offer the public opportunities to provide input which will be considered.

What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.?

Especially in a high interest rate environment where cash flows on long term rentals are muted and there is significant capital required to purchase and list on airbnb.I live near NYC but would invest out of state in an airbnb / landlord friendly state.

That would probably require a professional.