Also, is it a valid for them to request $199 fee just to begin the process of considering a loan?

It's going to cost you $154.35 plus envelopes to do this, but that small cost will save you a lot in the long run when you factor in time, plus gas money. 

I also have an excellent GC as well as an investor client (I'm an agent) who I've become good friends with that is helping me with this project.As a selling point for the investors, I offered to escrow 6 months taxes, insurance and interest payments at closing as I think this should cover me for the time to complete the rehab.I'm planning on gut rehabbing the property (kitchens, bathrooms, electrical, plumbing, new gas boiler, insulation, roof, windows, flooring) and renting it to section 8 tenants in my area.

@Frank Durham OK, so I guess you can sell a big camper on craigslist too, but the point is still valid :)

We just bought a 4plex with gas and electricity split 5 ways (5th account for common areas) BUT the leases all had the landlord paying the utilities as long as they did not exceed $175 in a month.  

But actually I've seen higher pay for engineers in TX, especially in my industry (Oil & Gas).

But it all seems like East coast red tape to me, kind of like how New Jersey doesn't let you pump your own gas.  

However, when we returned home after the inspection, we noticed the buyer/inspector/buyer agent did not shut down our gas fire place and wall oven before they all left.

There was speculation that the oil and gas slowdown would affect the area a bit, but that does not seem to be the case.

@Nick L.I've spoken to one of the floor owners a couple times, one time 2-3 years ago at length when he agreed to sit down with me and discuss how he liked the building when I was considering purchasing another floor avail through foreclosure.I think the other floor owners do not have the money (part of the problem with the building are the high expenses (electric, gas insurance, property mgmt, elevator maintenance) all shared and divied up per floor - and with only a few paying in to these expenses it just exacerbates the the problem, secondly 2-3 people are owner occupy and they just wanted the floor for themselves, really have no interest in being RE investors.Where I see the opportunity is getting the building stabilized - getting the bad people out getting it leased up and getting the specials paid off - once this is done this would be an amazing investment.