Having been one recently I can testify that they are likely sleep deprived, anxious over kids sniffles, and exhausted from moving in.Are they concerned about lead or other contaminants?

It is an exhaustive list.

I have done an exhaustive search for good lenders in FL and GA, and every one that comes up on a search (not naming names) has fairly to very negative reviews with members. 

If someone is on the outside looking in with limited knowledge other than an occasional macro level article they read then they might perceive risk.  

He said he would inform his people of my decision.Less than an hour later the loan officer called me back and said he had talked with his managers and they were discussing if they could bypass the issues with the permits.

Financing might be better in a larger LLC holding more assets than an empty shell newly formed.I'd say get with your attorney and kick these issues around, it might be better and simpler to do them one offs, but I doubt I would.

Need hot water, cold water, drain line, electric for dryer, and dryer exhaust vent.

If it's clay it is likely broken in places or if it's galvanized it is corroded from the inside and leaking outside underground.To replace just this one pipe depends on the length of run from the street to the building(s) and if certain sections are under one of your roads or your parking lot.This can cost tens of thousands to a hundred thousand in some cases to fix just to replace the pipe to the building.So that one item only can add up to another 2,500 per door in rehab costs to a 40 unit.Another one is EPA cleanup.You would need to look at what properties are around it for possible contamination and get a Phase 1 report completed.I haven't even gotten into if the building does not have a sprinkler system and the city or county wants one installed to bring up to code.5.You need to look at down trending of rents.With the foreclosures you want to rehab fast and pick from the most qualified tenants to release up.So just on basic info you have posted and not knowing anything else.40 units at 325 rent is 13,000 a month X 12 = 156,000 yearly gross156,000 minus expenses7% property management10% vacancy (your numbers are based off low rent so vacancy upon rehab should be less than going for full market rents)38% operating and expenses55% expense= 85,800 156,000 - 85,800 = 70,200 NOI once stabilized (1 year turn around expected for full rehab and rent up depending on what is needed)Value at a 10 cap is 720,000 before resale costs.Cost per unit for rehab 10k = 400kPurchase price = 150k550k - 720k new value = 170,000 forced equity.You have to remember the level of rehab needed per unit and the expected rents will play a large factor.This is just an estimate.I would find someone knowledgable to partner with if you plan to proceed otherwise you will have angry partners who lose money and multiple lawsuits will ensue when it goes bad.I by no means put an exhaustive analysis here just the basics.

They want to recycle money quickly to increase their returns, they aren't looking to collect installment payments long term.Rental properties generally get either conventional financing (15 - 30 years fixed) or after that's exhausted or otherwise unavailable, will go with private funding (generally a bit more expensive, shorter amortizations, and variable rates).

My question may be more of a legal/ethics question rather than an investment question.