I'm not the homeowner but potentially the co-host/property manager.

Jackie In general, condos are often seen as a better investment option compared to co-ops because with a condo, you own your specific unit and can have more control over its value and potential for appreciation.

Rapidly escalating HOA fees, special assessments, and large insurance premium increases may contribute to substantial drop in affordability and impact valuations.

They typically do not charge to assess the property since they know they will get the job when we close. 

Drove passed by this home, from another potential investment deal.

We are more than willing to travel out there to interview the potential companies in person, but, like I said, we are not interested in managing these properties ourselves and are looking for suggestions of potential PM's.

Could be a nice AirBNB studio with income potential up to $1500/mo by itself.

Is he being overly cautious or is this something that could potentially alert the lender?

Make sure potential builders sign a non-disclosure agreement (NDA) before showing them your plans.

When screening potential tenants, be sure to check for credit history, rental history, and ask for references from previous landlords or roommates.