I am assuming an immediate rent increase from 700 to 900 would cause the tenants to simply not pay it. 

The only reason an insurance company would want you to replace all those things is if they are old or the cause of the prior claims.

If it hasn't caused any major problems and does make s*** run uphill, I would monitor and let it be unless you just want to fix it and not have to think about it again.

I don’t mind doing a cash out refi 6 months later but I really hate doing that cause it’s 2x closing costs in a 6 month span, and that’s not as ideal.  

A good tenant is someone who:Has stable employment in a market segment that is very likely to be stable or improve over timeHas a credit history with which you can evaluate the likelihood that they will performPays all the rent on scheduleTakes care of the propertyDoes not cause problems with neighborsDoes not engage in illegal activities while on the propertyStays for many yearsThe right tenant pool is so important that I would interview multiple local property managers to validate the tenant pool selection.

Second, I 100% would not lie for them especially when they're trying to get out of their lease early, essentially causing you to lose one months rent.

But I was wondering if having another house under my name would cause any legal issues?

But I was wondering if having another house under my name would cause any legal issues?

Good people who have very few housing options are *very* likely to stay, pay rent, and cause no problems. 

The new single family home construction will likely cause some appreciation in the value of the duplex, but the housing type is different, so it might not be a whole lot.