Where I had issues was during construction and getting the checks from the lender.

I recently ran into this question with my remote multi-family property so want to see whether people have any thoughts or what should be normal practice.I hired a local 3rd party property management company to help me monitor operations, manage payrolls, and handle issues for my remote multi-family property.

Quote from @Joseph Milano: I would talk to the renter to see what they want to do.The easiest method is to get tenant's permission to apply the funds toward their next month of rent.If they prefer the money back, I would issue them a check, money order, or cashier check when they sign the new lease.

Even after fines and penalties are issued, they refuse to accept responsibility and want to charge additional fees to correct their own errors.

I ran into an issue with insurance on one of my properties.House built in 1880, 5 units with another in a semi-detached house that has its own address.Insurance before purchase was a bear but I finally got Auto-owners to cover it.A year later they reviewed it and oops your electrical is not up to code and now I have to spend another $30k to fix it or they drop me.If it was only 4 units then it was likely that Foremost would have covered it with a rider.

This is really disappointing because I am ready to purchase another property today but will not get approved or have horrible loan terms due to a 640 credit score.Does anyone have any recommendations on how to remediate this issue?

Shouldn't have any issues converting it over to RD R-2 Medium DensityResidential District and can build 3 quadplexes on it. 

Insurance doesn't cover maintenance related issues or "wear and tear."

These type of issues should be disclosed when the Appraiser first makes contact.5.

So technically, a 203k will not work for your situation unless you do a refi AFTER you buy it or do not pay cash but do a 203k from the onset.