The fewer items the association is responsible for, the lower your fees will be and the less chances of a major spike down the road due to unforeseen circumstances.

The borrowers must occupy the property within 60 days after closing and must continuously occupy the property for one year unless they can document hardship or extenuating circumstances. 203(b) is what most people call "normal "FHA loans.  

Being that these homes had code violations did you find that the homes had additional problems more then just code issues. i feel with code issues comes a general neglect for the property.

In your scenario, if my circumstances permitted, I'd be tempted to pull out as much cash as possible now and refinance it again with a conventional mortgage (historically low rate); then rinse and repeat, without needing to wait for your cash to start accumulating first.  

I see you are considering TX; like I tell any new investor, do not neglect the Alamo City!

Whether or not they will...I don't have my license yet (working on that), but given the circumstances of the transaction (not representing an external client, an innocuous mistake based on inexperience with this type of transaction), I'd probably be looking for a new broker if they wanted to charge me more than simple, reasonable expenses.

You can get a 5-year guarantee on new construction rental property under the right circumstances (http://www.biggerpockets.com/forums/517/topics/174...).

Cost us thousand of dollars because they neglect the properties and ignored the tenants.

If I mitigate mold, asbestos, or lead based paint, potential exposure to a tenant is zero in normal circumstances.  

Hi Hitesh,I can understand your situation as I have had multiple investors from California work with me here in Austin under the same circumstances.