Was there a mortgage on her credit report and if so, how was the payment history?

You could do that for 3-5% down.. live in it for a year to meet typical requirements for use… then move into a new house, and ‘voila’ - you bought your second (multi-family) rental for 3-5% down instead of 20-25%.It is entirely possible though that you will face debt to income issues on your first rental if your lender wants to see a year or twos worth of rental history before counting your rental income to offset your debt payments…so beware of that.Otherwise you may have to look at creative financing… maybe bringing in a money person where it was a short term investment for them, like “I’ll give you 8% on your money (versus the 4-5,% you could earn from the bank CD) if you will partner with me on this purchase.”

After analyzing the local Mercer County market I've noticed there are not that many MFH that are desirable meaning cash flow can occur, but appreciation, schools and good tenants will be at risk.

For a duplex that you're renovating and potentially BRRRR'ing I would look to target to get 80%+ of my cash back on the refinance and then cash flow a bit less - maybe $100-$150 per door.  

I had even set up payments to my bank account through Zillow that was verified.

For a tenant, a shorter grace period could cause stress associated with late payments, whereas, for landlords, a 5-day grace period could reduce stress, simplifying management but potentially reducing flexibility in handling late payments.While I see significant benefits for tenants regarding stability and protection, the proposal also challenges landlords, particularly in maintaining profitability and managing market-driven rent adjustments. 

No issues, 65-70% of LTV without any US credit on DSCR Programs.If he has significant down payment, pricing will be extremely competitive.

Quite often I see the seller requiring some type of downpayment, with interest only payments (usually higher than market rates) for X years, with a balloon payment due at the end of the term. 

What is the downside of using a commercial lender to purchase, my own cash to rehab, and then refinancing?  

But the lender does not allow loan payment from the LLC business account because the name of that account does not match the borrower (me).