Is this choice ethical and legal?

You can also have multiple Named Insureds (LLC's, Partnerships, etc) on the policy as long as there is common ownership between the Named Insureds.There are several popular insurance programs in the market place that Flippers use.

After dong this, my lending institution of choice will now disregard the seasoning period because now there is a mortgage on the property and they look at this as a re-fi, in essence my bank is able to "steal" away a mortgage from another lending institution,(e.g. my business in this case) so they don't care how long the property has been owned. 

This is hard for most investors because buying what is not popular is frightening.

Only 9 of the 100+ inquiring people actually filled out the pre-screening form and 5 of them were invited to view the property.We gave people the choice to fill out paper application and pay $35/adult for background screening or apply for free through Naborly.

people on wait list...My agent is telling me this is not a good choice...which I agree with from investor perspective, but life is gonna be so much better :) Also I wonder if working towards removing rental cap during 1-2 years when I will be living there is not too big of a risk.

Income tax has never played a role in my choices.

Not specifically but new construction is almost never the way to go, I don't know about Central CA but here in southern CA Mello Roos and increased property tax rates became really popular with new construction so where something built in 1990 would have a tax rate of 1.1% something built in 2015 could be 2.1%. 

Lots like these by the lake are very popular in my area right now due to the tiny house trend.

Process, costs, hot area's.... lot of choices in talk turkey.