I live in a smaller and older suburb of Fort Worth where I am less likely to get tracked down (I see evidence of work on properties all around me that are clearly not permitted or up to code), but also know that the specs on the house will change with the appraisal district once I get the property refinanced. 

I live in S pringville, UT.

Did they buy it as an investment or to live in?

I live in a newly constructed town home (2 years old) - I've had rodent problems for the past year with mice scratching the walls and making entry into the home.

She pulled permits and lives there full time now!

When you sell your primary (living there 2 of the last 5 years), you don't make taxes on the first 500k of profit.

I think David Ramsey's points about living within your means and saving is good, but it doesn't apply to housing. 

If you are wanting to learn more about how to protect yourself as the PML, check out the book Lend to Live: Earn Hassle-Free Passive Income in Real Estate with Private Money Lending available in the BiggerPockets bookstore!

I live in a tenant friendly state hence the tenant normally wins under the circumstances unless you have evidence to back up your claim. 

You can either do an income based loan underwritten by your income and supported by financial documents or a DSCR loan if an investment property you don't live in.