Deposits from the tenant.Security deposits from the tenant in residential dwelling units shall be deposited in a trust account with a licensed and federally insured depository institution lawfully doing business in this State or the landlord may, at his option, furnish a bond from an insurance company licensed to do business in North Carolina.

Are there any institutions or other loan products that offer 3.5% down (potentially can go up to 10% depending on the total construction costs) AND takes into account the rental income?

No lending institution or bank would be permitted to operate with those ratios.

It felt like a dream come true—until I moved in and discovered a flooded toilet in my unit that didn't come up in the inspection.

Not sure you can discover a Concealed Eviction as this is the first I've heard of it.  

A water line burst in the 3rd floor ceiling and by the time I discovered it there were beautiful waterfalls from the ceiling on each floor and severeal inches of water in the basement.

Our dollar is losing value so you need to be with a solid operator in institutional assets that cashflow in markets while hedging inflation with tax benefits. 

I would be amazed, shocked even, if a traditional financial institution was willing to lend on a non-habitable asset up to 80%. 

.—(1) Whenever money is deposited or advanced by a tenant on a rental agreement as security for performance of the rental agreement or as advance rent for other than the next immediate rental period, the landlord or the landlord’s agent shall either:(a) Hold the total amount of such money in a separate non-interest-bearing account in a Florida banking institution for the benefit of the tenant or tenants.

With my LTRs I have been switching to all tenant paid utilities after my first winter where I discovered the majority of my tenants were setting the heat at 78 (which is unreasonable in Northern New Hampshire) and leaving their windows open in -20 degree weather.