Most of my tenants pay close to $20,000 a year in rent, it’s a small price for me to pay to ensure their safety. 

Owner needs to pick them up in his truck every day, pray that there are no parts to return needed and unavailable, watch for the health and safety of every grain of sand, serve food, motivate, problem solve and never cry.  

They will have for these new projects their own property management arm, an insurance option as well i'm told.   

Safety and quality of life can/will be influenced by your tenant.

@John Kubilis main reason you want a legal bedroom is fire safety.

Great post Golan,I have always been of the belief that appreciation is more speculative and unpredictable.Nobody has a crystal ball to predict the future.Cashflow is more "certain" and based of the numbers as they are today rather than forecasting what might happen in the future.You take the income vs the expenses, plus including a margin of safety for misc expenses and then you look at the bottom line.If the numbers make sense, the deal is worth pursuing further."

Not sure if it is a scam or if it would pose potential safety/privacy issue.

These could be valuable for future investments while you have a good safety net of having a steady place to live. 

I'd also like to ask if the rate difference between 30 fix and 5/6 Arm is now typically less than 1%.

If I could not find one on a property, I would note that as a safety concern and would highly encourage adding one for the safety of the home owners.