It's bad enough if they're renting a separate property from you. 

We are under the impression that the FHA 203k Rehab loan is incorporated in the mortgage payment for the loan and not a separate loan that is to be paid with a different lender or different account.

I'm debating whether it is worthwhile creating a separate legal structure. 

If they can't pay rent for a month or two, that's a separate issue.

Should I maybe try to rent out to each student separately instead of continuing to look for a group of 10?

Permit cost and trash removal should have been their own separate line item pricing unless the permits or trash removal are for items that were unknown at the start of the project.Are you using a Certified 203k Contractor listed at 203kContractors.com? 

I currently only have one SFR rented out as 4 separate units (room by room).

You may even consider one multi-zone boiler to avoid the costs of bringing in 3 separate utilities.

We will wait and see how four multifamily deals that we evaluated (two (2) separate 16 unit properties, a 20 unit and a 32 unit) will perform as things turn and develop.

(Separate entrances, two kitchens, separate utilities, etc.)The first speed bump came with the appraisal.