If so, lean on your experience with those to underwrite vacancy, bad debt, repairs, etc. appropriately for the condition and location of these properties.

I live in California and I'm trying to be very careful to do the appropriate thing. 

And by you posting in this forum that you are looking for ways around the requirement or to prove the requirement just gives them reason to not believe you.Either do the house hack and live in it as your primary residence, or treat it as an investment and get the appropriate funding for that.

An incident occured upstairs, not due to your negligience as a landlord, and you are responding appropriately and having the damage repaired. 

Focusing on generational wealth is probably not your best prospect.A better focus might be running the property in a professional manner, maintaining the asset value of the property through appropriate repairs and upgrades , learning some best practices for management , and having enough cash reserves to keep the property from being seized by the bank in lean times .

Are there limits to the amount of people appropriate/allowed for the size of home? 

However, a cost segregation study will reclassify property into its appropriate useful life.

So FHA has two sections:FHA section 203(b) is intended for properties that are move-in ready.However, FHA section 203(K) enables homebuyers to finance the purchase of a home and the cost of its rehabilitation. 

This means that you will probably need to pay registration and filing fees in at least 2 states if you don’t buy CA property as a CA resident.Any lawsuits should be limited to the assets of the LLC and not your personal assets (assuming you run the LLC appropriately and the corporate veil is not pierced, some debate as to SMLLC).

A mini-split will meet that requirement (as long as it's sized appropriately) whereas a window unit will not.