You might think about a cash-out refi so you can drop the PMI, maybe lower your rate (might not be lower since investment property rates are higher than owner-occupant rates), and have some cash to offset some of the repairs.  

The university has built several large apartment complexes and do not even have 50 percent occupancy.

In Calif, if there has been a death in a rental or a home for sale, notice must be made to the next occupant, but no specific wording is required to my knowledge.

If you can get a pre approved 203k or FHA loan I really like Jersey City for an owner occupant.

To  my knowledge, yes:Per Fannie-Mae, "First Look," is a nationwide initiative that restricts offers on all Fannie Mae-owned properties to potential owner-occupants -- rather than investors -- during the first 15 days on the market".Let me know if I can help in any other way!

I can also get AirBnb occupancy data, average revenue per property, etc. for these areas to make it a low-risk investment.

A tenant's estate (his mom) remains liable for payment of rent if the tenant dies; the landlord's (your) estate remains bound to provide occupancy despite the landlord's death.

Does renting out a room mean that if the house has two occupants that both parties split the utilities? 

I have 20+ years as licensed real estate professional (and beyond that in real estate consulting), 16  years in property management SF/MF, 90+ units, 97%+ occupancy and collection rate.

When we buy at the Allegheny county sale they say we are not supposed to enter the premises or contact the occupants until the deed is recorded.