I spoke to a floor specialist (that she used) and he said that was due to excessive moisture. 

This will wipe out any excess cash flow expected once rates decease.

People can be profitable investors without necessarily having the conventional "swagger" or excessive confidence.

If there are no visible signs there is damage the landlord probably assumes he is not liable for the excess water being used.

If you do a cash out for excess money over what the construction loan balance is, your LTV will be lower (typically 5%) than a straight refinance (which is how paying off the construction loan will be treated) and your rate will be higher (likely ~1% higher) assuming you use a typical 30 year residential mortgage.I would not wait until all the permanent financing is done to rent it out, as you have stated. 

I was curious what you all would do in this situation: A guest arrives and sends pictures of water in the sinks and toilets which is colored due to excess iron levels.

Seems a little excessive??

If guests don't like my list which I do not deem excessive but rather necessary for the operation of my business, I don't need them as guest.  

I contributed up to our company match, then invested any excess funds in real estate. 

We've listed the property on Zillow and Apartments and have received several applications but denied every single one due to evictions, criminal records, not enough income, excessive debt, etc.