However, you should be underwriting the property's financials to the way the market dictates it should reasonably be run. 

Most properties do not receive the full list price - at the end of the day the market dictates the price of the property.

The market will dictate what investors will buy and at.

Unfortunately it doesn't matter what I think it matters what the market dictates.

What you are describing as a "strategy" is based on the market of choice dictating your limits...instead of you choosing a market based on the goals you have in REI.  

The financial capability will determine what type of properties are open to them for investment.Then I hop on a call and I give them my opinion.If you just want nice passive cash on cash it's all about the location of the property, the size from a management aspect, and the debt structure that dictates returns.I hear this all the time where people say " I have all this money but what do I invest in??"

Common sense would dictate all bedrooms are required to have an egress window....Were I you I would contact the local jurisdiction for clarification...Good Luck !

It hurts to drop but the market dictates your price action.

Why should the government dictate how much your property is worth?

You can have 50 house rules dictating what your tenant can or cannot do, they will ignore them and do what THEY want to do.