It is assumed by the state that any rental larger than a 1 bedroom will fall into this category at some point because of the anti-discrimination laws that prevent landlords from refusing a family because they have a child.

Assuming I am correct, the local city planning cannot legally prevent it.   

If you are covering it, I would recommend screwing into the floor joists with flooring screws to prevent movement prior to vinyl installation.

While you are looking for a potential state to invest in, make sure to take these costs into consideration as they will ultimately affect your ROI.Some states have rent control which prevent landlords from raising rents to account for inflation and yearly tax increases.

I would like have them pay for utilities to prevent excessive use of appliances/ heat/ AC.

What's preventing you from refinancing your mortgage to access 75-80% LTV on the current value of your property?

People use them, but Real Estate is already tax-efficient as-is if you're not wholesaleing and the IRA will prevent you from using those funds until age 59 1/2, plus they can be expensive to administer since they are not common.As for the 401(k), I typically advise to contribute up to what your company will match. 

My question is, is this just something that will prevent my property from losing value with a dead lawn, or is having an in ground sprinkler system something that can force some appreciation of my property?

After some searching I'm not seeing any exclusions that prevent an LLC from suing or requiring a lawyer in small claims court.

Wholesaling is a niche solution for property owners with specific needs that prevent them from selling traditionally.