In addition to price you should condsider the quality of the company (AM Best rates, Insurance dept complaints, reviews,....) and the quality of the agent (do they know this type of business, how many companies do the represent, etc..)

Additionally, considering the average cap rate in the area could give you a better idea of whether this property is a good investment compared to others in the same area.

So I'll initially start with the minimum loan size with some cash reserves taking up the additional space between there and purchase price.   

Perhaps, we look in to utilizing the equity to acquire additional property? 

If the water bill is $100 a month, increase the price by 20% (or whatever you decide is fair) to compensate you for the time required to split and bill and to cover additional use when tenants squander the utility.

Your local PHA may also have resources to help match landlords with eligible tenants.The PHA must approve the lease agreement, ensuring it complies with Section 8 rules and rent limits.Pros:Guaranteed Rent Payments (sometimes even 100% based on certain tenant criteria)High demand for Section 8 rentals, which can reduce vacancy periods.Many Section 8 tenants prefer to stay long-term, reducing turnover rates.Cons:Properties must meet and maintain HUD's health and safety standards, which can involve additional maintenance and inspection requirements.The PHA limits how much rent you can charge, which may be lower than the market rate in some areas.Tenants must qualify for Section 8 based on income level and other factors, which may limit the pool of potential renters.Dealing with government agencies can sometimes be time-consuming and bureaucratic.In summary, converting your home into a Section 8 rental can be a good strategy for attracting and maintaining long-term tenants due to the stability and reliability of government-backed rent payments.

I'd let the property management company know that your insurance company denied the claim you filed and have them contact their property management insurance (E &O) in addition to sending you the contact information to their insurance agent's name, contact information, and policy number. 

Because of this, I believe the insurance should remain in the seller's name and we should be named as additionally insured, to avoid alerting the lender or dealing with 2 policies.

It is currently a 4 unit, 2 units on each floor, and after my initial walk through of the property I noticed a HUGE unused attic that can convert into one if not two additional units. 

The answer question 1, although they likely won't exercise it, they could technically trigger the due on sale clause and force a payoff if you transfer and question 2, Yes...you will have credit pulls regardless of the loan direction with few exceptions.