Have those cash reserves ready so when we hit another bump you can clean up on those people that made poor decisions.

Their appraisal will, of necessity, contain a selection of properties in your area in degrees of repair from poor to great.

The other tenant credit is very poor.  

If anyone knows if it can be done on either a conventional loan, fha loan for a triplex, or would a portfolio lender be the best bet?  

That seems like poor decision making on the banks part given the LTV.

And don't get overexcited by the occupancy rate, I would be willing to bet that occupancy is high because its 100% section 8 tenants.

When I met him face to face, he said I bet your surprised to meet a Chinese guy with an Australian accent.

My guess, some will, some won't at which time you can give the poor payers the 30 days notices (essentially giving them a probationary period with the month to month and new rules to see which tenants can handle the new format and which can't ). 

I purchased a 16 unit foreclosure with great bones and poor management.  

.- assume 100% chance the sellers wont do anything. i am betting a pizza on it and i hate betting!