tradition financing with seller credit and state grant How did you add value to the deal?

Those are all really expensive items and can easily add up to $35k+ per unit.

It may make sense to have a Traditional LLC as the operating company (property management firm) and then another strategy for asset protection for holding your rental properties. 

I guess at this point, I am going to focus more on some of the variables and not go with "traditional" numbers.

After talking with @Rex Celle I decided I would go with a traditional conventional loan to purchase this home......If using a conventional financing my focus is to use them on multifamily properties.

If necessary, as in for larger-ticket items, get "a couple two-tree" contractor written estimates and get your price reduction.  

Some also look to purchase a nonperforming note with the sole intent of foreclosing, taking the property back and fixing up to sell with owner financing or as a fix and flip to a traditional buyer.  

However, we're well aware that no traditional lender will be likely to approve us for a second mortgage so soon after acquiring our first one since it would make our debt-to-income ratio go through the roof.

"I'll only work with someone who invests" is just an objection that people throw at you that can easily be overcome by any or all of the items above. 

What seems less likely is that the landlord (from herein referred to as "slumlord") will want to fix the minimum items necessary to allow the property to meet FHA guidelines.