The elimination of the mortgage payment (added CF in your mind) isn't enough to cover the out of pocket cost to you.  

Evidently there is some old damage where it was treated a long time ago in 1995 (the pictures in white) according to the owner and then an active spot by the garage door interior. 

Paul forums will get you more responses, so maybe re-post this over there.1) I'd advise adding a picture to your profile and filling it out a bit more- easier to have conversations (even on the forums) with someone when you can picture yourself talking to them in real life.2) I read your strategy- glad to see you've put some thought into it!

Second person abandoned her lease and refuse to pay all  the amount required to cover the property damages at her house.

If your places don't look good in the pictures then there's not an incentive for someone to come and see it in person.

This obviously covers the 2% rule.

Thanks Business purpose loans do not require NMLS numbers and are not considered "covered mortgages" by Dodd-Frank. 

I would offer them double their current rent amount, so they have enough to cover a new deposit and have some play money - which is the incentive.

The seller has agreed to sell me the property if I can find funding he is willing to cover down payment with a seller second.

2nd piece is the house hack...We think best course of action would be to have an investor friend we know buy the house in cash, once we are done with renovations, we then take out a full mortgage on the house to cover whatever he paid for it and then pay him back with some interest.