You may need to modify the flow as well if the property is not functional as a single family home due to the problem with flow you refer to.

I would encourage reaching out to your REA as well for proper due diligence. 

If you want to do this properly I would set up a mtm lease for each of them that way you can record the income for tax purposes. 

It does put me in an....ethical dilemma, which maybe can be solved through proper disclosures, that if a house has been rehabbed...have the major mechanical systems, and capex been updated also?  

Maintenance of of the property (including landscaping), proper termination of lease, adding/removing tenants or animals, dealing with damages and deposits, and more. 

Your Pre-Approval letter properly positions you and your agent as to what your buying power is.

It seems that this would open us up to potential legal issues if the management company were to use discriminatory tenant vetting practices, not following the proper process during an eviction, etc.I would expect that part of the reason to hire a management company is to have someone that is more familiar with these laws and to ensure that we are not in violation.

If the toilet is old and non-functional, replace it. 

What did you do to ensure the pool was properly maintained to avoid large, unnecessary costs?

With that being said, make sure you properly research and receive referrals when deciding to use a HML.