Sure - you're talking about the appraisal for "safety" in addition to the amount financed.If the property has issues that would cause it to fail FHA (also VA and USDA), then I can see why a seller would refuse your offer.  

We know from the start not to bank on appreciation and we address safety issues, roofs, and exterior problems immediately.Once those issues are stable we only do what is needed to make the unit rentable in its market.

We have added some safety measures like monitoring system and alarms. 

Prudent investing would indicate it is imperative that safety margins be built into the purchase of an investment property.

Now if the issue was safety I would feel differently because I don't want something in an unsafe area.

Is the unit flooding or are there urgent health/safety issue?

In 30 years I have never heard of a SFH investor, dollar for dollar, ever match the returns of multi investors.When the numbers are properly analysed multies will always come out ahead for safety in investing and cash flow per door/dollar.

You might never use those 9 months of reserves, you might be able to build up reserves from the property income itself, but it never hurts to have that safety net for the 'what ifs' that often happen with multifamily (or any) investment properties.

There are some code and fire safety requirements that come in to play when differentiating short term weekly rentals from long term "apartments" but that's a whole different story.I'm guessing Colorado laws are different so this will be an interesting story to watch.

To do this I bought homes that needed new carpet, paint, and health and safety items.