They like extra room to avoid accidents, etc....Just my $0.02....

100% financing, no payments, financing in extra "cash out" money upfront so you can do a rate/term refi once you pay them off... 

They're pretty organized, but expect annual inspections and some extra paperwork. 

That way you wouldn't need an extra policy.

Before you close, can the rent from your buddy and the midterm tenant cover your mortgage, taxes, insurance, plus a bit extra?

If your average heating bill is $150, you may not collect enough in the winter months when the bill reaches $225 but you'll collect extra in the summer when it drops to $65.

I am trying to help people who are hurting and their motives would be..........?

-A water heater issue resulted in repeated mismanagement—confusing unit assignments—leading to extra costs to fix the same issue 3 times and on each occasion "more fixes" needed to the water heaters that I plumber said was needed.

You'll want to have an insurance agent familiar with rentals since a lot of the extras on your coverage that you will want, the average insurance agent won't know to give you. 

If I find the buyer I would charge and extra 1.5%.