Make sure you know the law on non paying occupants and what their rights are and what the owners rights are.

The trailers were not designed for long term occupancy, as a manufactured home is.

I asked my realtor why this went so smoothly, turns out, this seller has been under contract with owner occupants twice already both of whom cancelled at the last minute.

If you're talking about an owner occupant property, yes, probably should get a pre-approval. 

The VA allows owner occupants to purchase multifamily properties using the no down payment method for up to 4 units.

Homeowners/owner occupants (typically speaking but all states have different laws regarding this) are offered higher standards of notice and protection regarding the home in which they live as opposed to a property owned by a legal entity or non owner occupant homes.From there, any other reasons a contractor would ask would be for level of finishes, hours to operate, need to cover and protect furnishings, ability to work on all parts of home at once, etc.

Looks like I will need to give my contractor a call today and talk through some different options.Currently, the property does not have separately metered utilities so all utilities are split proportionally based upon per person occupancy.

They essentially allow you to convert the basement to a rental if you are an owner occupant.

Actually, if you're moving from Boston, wait the required 1 year for owner occupancy, and you move back to the DC area, you should be able to use FHA again. 

Based on above, it sounds more like you have just not treated this as a business, so it might be best to agree to pro-rate rent to the last day of occupancy and return of keys, and simply consider this the cost of a lesson.Obviously I know nothing about your particular house, or the flash floods you have experienced, but why would you, apparently, do nothing when you have water intrusion?