The house is structurally sound and safe.  

Nothing is safe from Creditors.

On the other hand I have consulted a lawyer in the particular state who says these type of loans are subject to the SAFE act and thus require specific licensing. 

This falls under the SAFE Act.

This way you are making a safe offer and you are prepared to walk if the numbers don't work.

Losing the $50 holding deposit was the price of our lesson.Some of my best tenants are ones that cared enough to make sure the place was safe and comfortable.

On the MLS, most of the deals I'm finding (in safe, good areas) will give me 5-15% equity after repairs - nothing really fantastic, but I've convinced myself that this may be the best I can expect.

I think that's a safe bet in your situation Thomas.

Residents of such neighborhoods share the universal interest in living in safe, wholesome and sustainable communities.

I would be advising the tenants that you'll be entering their homes at a particular time and date, so that you can turn off all of their watering devices to check for leaks, since you've seen a big increase on water consumption.It'll sort of give notice to the one tenant that she might be overdoing it and it allows you to check if there's a leak somewhere, if the meter is still moving when everything's turned off