For example, if they are a sex offender or they just got out of prison two weeks ago for murder, that would be an automatic denial.

It would appear to me that this would a fatale variable that would reduce the value of IRR.  

Thats something that I am thinking about but more inclined towards not adding the washer drier.I was reading this book "Crushing it in apartment investing" and the author mentioned about adding water reducing faucets or motion detecting bulbs which will be turned off automatically.

I bet the probability of someone with one house that desperately needs to sell, is a LOT higher then someone with 2 houses.So you are in fact PAYING money TO reduce your chances of success.And I was just being polite when I said "the probability".

Give them plenty of time to make other arrangements because a big rent correction is happening or increase rents gradually over time and let them stay for continued reduced rent if you feel more comfortable with that.

I know the seller wants out but see if you can negotiate him paying for the demolition or any reduced taxes,water,sewer,maintenance bills there may be, that may help your numbers.

Reducing price even half doesn't help ..its the income property needs to generate.

My goal would be to bring in enough rental income to offset the expenses so that I can reduce my housing expenses as close to zero as possible.I've seen some scattered info on the web that deducting taxes from owner-occupied rentals is a bit different (square footage versus # bedrooms rented out versus pro-rata, etc).

Someone mentioned an S corporation which is a method to reduce that self employment tax- but really only advisable if you've made over $60-70k. 

So if a bank wants to reduce their exposure to that...then they will put extra rule in place.