If they smoke and your policy is that you do not allow smokers as tenants, they have to go.If you permit them to stay, you will come to regret your decision and will pay the price both financially and in free rent in your head for allowing yourself to be talked into an obvious conflict of behavior.Smokers pay a price for their habit beyond sales taxes and health issues.

One would be finding a property that has profit potential while being currently habitable, do able just going to be harder to find the right deal.  

Break the habit now before it blows your credibility in a professional situation.One of my earliest negotiations coaches taught me how to look at things a bit differently.

That's a really serious issue and affects the habitability of the house.  

She buys a habitable house through FHA (minimizing the down payment).

But the law also allows the tenant to waive the right to receive these notices.As for your repair issue, there are few points to consider.First, you should know that all PA landlords give an "implied warranty of habitability" to its tenants.

How to Win Friends and Influence People6. 7 Habits of Highly Effective PeopleThere's a lot more I could suggest (I read a book a week), but I'm keeping to the realm of real estate.

Backing out is not a good habit to get in.

I would be worried someone would file something against me for having tenants in a house unfit for habitation. 

Even though it may not seem like much, even putting back $200 a month and making that a habit will eventually build into a few thousand.