Account Closed Disclosure: I am currently house hacking a duplex so my response will be bias toward that lifestyle.A couple things you didn't address: Pro for house hacking - appreciation and potentially mortgage interest tax benefit (we'll see come March 2019 if this is still a benefit).Also, if I understood you correctly, your rent hacking strategy was to find someone else with a rental property that will rent to you and allow you to sublet part of the property, so why would you need 25% down if you aren't purchasing it?

In full disclosure I have only done  SFR deals and I just started syndicating deals 400-600k. 

At this point, I am going to speak with our attorneys as to what our legal rights are as tenants w/r/t to the crime and non-disclosure of a high-crime area, as well as the black mold and our exposure to it and our resulting damages.

Disclosure laws vary by state and often the drugs manufactured in the house.  

Being a Realtor, hopefully your brother made all of the necessary disclosures

You might consider looking at any disclosures, including radon from the most recent sale documents if available.

Anything built before 1978 just has a disclosure that there may be led paint present. 

They simply want the $ shown on the contract.In my experience, I don't get to decide for most sellers what they want to know or not - Hence full disclosure is required. 

Disclosure: I have never dealt with this situation personally, so I'm simply trying to put myself in the shoes of one of your tenants in the townhouse there. 

Full disclosure I am in the Wheelbarrow Profits Academy aka Jake & Gino Mentorship Program.