It’s easy to find tenants, population/jobs are increasing, and property taxes/insurance aren’t skyrocketing. 

Now if you didn't refinance rented that unit out before living in it for a year and changed your insurance policy to a commercial one, that could be problematic (just to give an example). 

Option 2 with second lender is, get an FHA loan at 3.5% and use the concession to buy discount points and bring a 6.2% interest rate down to a 5.4% permanent buy down, putting me at around $3,450.00 monthly PITI and also adding 8k to the top of the loan for mortgage insurance.

Generally, the fees can range from $500 to $2,500 or more, depending on the specifics of the loan and the attorney's rates.Here are some common fees associated with loan document preparation:Promissory Note and Loan Agreement: These are the core documents, and the cost of drafting these can range from $300 to $1,500, depending on the complexity of the deal and the lawyer's hourly rate.Deed of Trust or Mortgage: This is often required to secure the loan against the property and can cost an additional $300 to $1,000.Title Search and Title Insurance: If you’re using title insurance or require a title search to secure the loan, this can add another $300 to $800 or more to the cost.Other Documents: Depending on the type of loan (e.g., hard money loans, commercial loans), you might need additional documents like personal guarantees, collateral agreements, or an escrow agreement.

However, there are some drawbacks to putting a rental property in a trust - first setting up a trust can be expensive and involve a lot of paperwork, the rental property may be subject to rent control and liability insurance may be more expensive for a trust.

You left out information that maybe relevant such as taxes/insurance per year, maintenance cost anticipated per year... plus other expenses depending on rental such as management fee(if you aren't manager), advertising cost to acquire renters, etc....

I had doubts and still have some but now it sounds like those may have been necessary for their loan program after learning why it's a lower risk and FDIC insured requires that. 

Below are the key factors companies consider when choosing a city for investment:Low operating costs: Companies are unlikely to choose a location where state income taxes, property taxes, and insurance consume a significant portion of their potential profit.

Don't forget to add fringe benefits such as health insurance and also payroll taxes, etc. 

He said the borrower called and a tree fell on the roof and needed to file an insurance claim so wanted to file it against our insurance.2.