So, be patient!

Be patient.

I'm not a lawyer by any means but I'm unsure of how they can threaten a lawsuit if you have responded to the complaints, that frankly, aren't your problem (have nothing to do with safety of building or all systems working). 

I would check local fire safety ordinances the tenant may be putting the rest of the building in danger and breaking fire codes using unvented propane heaters in an apartment building. 

Let's say I want to ask for a bit more than I am anticipating I need as a safety net, just in case something does come along for more than what I anticipate spending on my first investment property.

Keep it as a safety net for yourself to make up for the added risk you are taking on with a less than stellar credit score.Good Luck!!

NOTE: It's the rare jurisdiction that will permit 3 people to occupy a 1-bedroom unit--it's an occupancy/health/safety issue, so check with your local zoning or housing department. 

Most likely you just have to be patient, you'll get someone in there.I would avoid mentioning pets until someone brings it up, and I also like the idea of just increasing the deposit for pets instead of a one time fee (if people pay it up front, they may feel like it buys them the right to let their pet run rampant!!)

In fact, I'll probably under leverage and take a lower cap rate (5-6%)  just to give me some buffer and safety for my first deal.

Kind of a safety net in my brain.Bought and rehabbed 80+ more SFR's without leverage.