The only exceptions are cases where public health or safety is involved."

If you can be patient with this process, then I would say go for it, as you can get a package deal of the price of the property plus any rehab costs. 

She also is the most patient and nicest (maybe too nice) tenant I've ever had, as much as she complains to me, she tells me not to say anything to the disgusting tenant and that she will just take care of stuff in the common area but I've went ahead on a few occasions told my disgusting tenant of the concerns.I'm hoping, since a lawyer wrote his notice of non-renewal letter and I served him over 3 months ago, that after eviction court re-opens, he has no legal defense for being a holdover tenant and that it is inevitable that he gets evicted and has to pay my attorney fees as well.Unfortunately for me, my disgusting tenant does more than collect trash in his room, despite being retired and at home 24-7, it is my understanding, he doesn't bathe nor ever wash his clothes so he'd probably need more than a housekeeper but the clause you mentioned couldn't hurt for me for the future.

Cash is king, cashflow is queen, tenant quality is key, and a conservative margin of safety is the ace up your sleeve!

There have been various lawsuits and issues with turnkey providers that operate hundreds or thousands of miles from their investors that never see there properties and think there are city maintenance and safety citations mailed to them. 

There is a guide on the PHA website that outlines all of the items they look for in a home - primarily safety issues and do not try to use logic to understand.

In doing some math, now I'm leaning toward keeping the money in the 401k, and coming up with down payments for REI elsewhere (lines of credit, patiently waiting for cash flow to accumulate, profits from flips).

& poor LLs aren't as patient picking a tenant, need to get top dollar out of a property, desperate for rent. 

This however could be a nightmare if you don't account for it and tenant safety is a concern. 

Inspections are for all safety items - i.e, handrails, not chipping paints, secure electrical, screens on all the doors, etc.