But as for the "blacklist" how can the banks(making us double close), government, or WHOEVER dictate such a thing, when what we do as RE investors is PERFECTLY LEGAL?

Let the market dictate the move.

If by "option" you mean "strategy", there is no one answer since the answer is specific to the property, that property's market, and the specific financial criteria dictated by the current timeline in your REI plan. 

The starting point is usually dictated by what you can afford, and less about what size you prefer.  8-10 lots per acre is fairly common.Properties within city limits of virtually all states usually have ordinances that have acreage, lot size, and setback requirements, among many other things - such as street construction standards. 

Since it's a sellers market the seller can dictate terms better. 

Short Sales can be tricky for pricing purposes as the investor (owner of the actual loan) is the one that dictates what they will actually allow the property to be sold for.  

there are many markets out there, don't let your location dictates where investment will be.  

Depending on factors such as the services you provide and the average length of stay can dictate whether the income is treated as rental income or ordinary business income.For Accounting - You should maintain a separate bank than your personal bank account.Do you plan to keep doing your taxes? 

That way if the tenant ever goes out the location and market should dictate ease of releasing the property and increased rents per sq ft in the market.

Depending on the level of the improvements, building codes may dictate the use of higher cost items in a multi-family property (copper supply plumbing, cast iron exit plumbing, hard wired smoke detectors, arc-fault breakers, maybe even sprinklers or fire escape).