(price includes home and any renovations completed).  

We had a fire/landlord policy with Norfolk and Dedham insurance, however after my last tenant and last property manager allowed my property to get into a state of severe disrepair, including water damage from a dishwasher/septic backup, which was never remediated, my insurer dropped me from coverage as a "bad risk" (we had made a claim for the water damage by the tenant).

Do a 1 year lease and let them know you are willing to keep them long term if things continue as they have been.I did a 2 year lease with one set of tenants and it includes annual rent increases.

Not sure of any residential lenders that can value the property off the income approach if that's what you're looking for, but you can still get appraisals that include it.

That's a red flag, never heard of Zeus lending either.

You can only get that rent if you include all utilities, which you would never ever want to do. 

In 100% of the cases I have experienced (including one we are working on as we speak) the roomates leave their crap behind and leave the house in a total mess. 

Is there something that could be an instant green or red flag for you?

Investors are looking for a solution including property identification and validation, inspections, renovation and management.

If there are any red flags on your mom's house, you may want to hold off on the cancellation of her current coverage until the new policy is issued and the company has done their inspection.