It’s only been about two weeks and they want him to move in, but they are balking at adding him to lease as they said he may not want to stay for entire lease term (which is 15 months) I’m not so much worried from a rent collecting perspective of having him on lease (i.e. making this person liable for rent), but i am a bit concerned about any other liabilities that I may not be aware of, from having an additional ‘rogue’ occupant. 

I wasn't aware there was an exemption - this is just a 3 unit building.

You should be aware that you will need to show the lenders cash on hand to make the interest payments.

Also, we were aware motorized watercraft was a HUGE liability (looked into this extensively!)

@Michael O Hanlon if you are going for student rentals in that pocket then you will definitely see a high cash flow with a stable rate of play since most parents sign off on the leases (a phrase that I am sure you are aware of and even more sure that I am not the first  or second or tenth to post.)

@Matt "Roar" Gardner, are you aware of similar loans as physician loans for Certified Nurse Anesthetists? 

[I am aware of 1031 exchanges and if we decided to keep the place would either not sell it or would try to do a 1031 to defer the tax payments.]5.

I am aware that some CC&R's cap number of possible rental properties and also some condos cannot be purchased with FHA...any other possible concerns with having condo rentals; please let me know.

Please be aware that marketing a property on craigslist and zillow that you do not own and do not have a license to sell is NOT a good idea.

That's what I feared that from Elm to Maple would be a "War zone" I looked at them today with my realtor.