If they are existing tenants with a good track record, and they're not doing anything that's not reversible or risking damaging good flooring, it can be considered. 

I have noticed over the last 2 years or so that there's more applications from people that work from home or have other non-traditional jobs, and I live in a pretty traditional area so it's not like a coast vs. flyover thing.

Obviously every house won't be a winner either so when we don't make much money, I won't still be on the hook for paying say 10% back.This investor wants to sign a 2 year deal with me, and non-compete so I can't use other investors money or go do this on my own. 

No mortgage, no existing tax liens, the house would need light repairs (paint and maybe floors).  

What are you seeing out there now with regards to loan terms for non-owner occupied, small multifamily properties (1-4 units)?

@Bruce HardingIf you are referring to using your 401k to fund your own business, the existing S-corp would need to revoke S-corp. status, as the ROBS 401k only works with a C-corporation structure.

But what kills is that FEMA levies a $250 flat fee, on top of the insurance amount, for non-owner occupied properties and/or multi's. 

I know roaches MAY be attributable to the cleanliness of a home, but I do not believe that bedbugs exist due to any fault of a tenant.

Almost half of my portfolio has Section 8 tenants in it and as non section 8 people move out i try to move in more Section 8 tenants but i make sure my property manager screens them THOROUGHLY....not with just what's on paper regarding credit report, income and past criminal activity (If any).....I make sure my PM screens to make sure they have no pets, no evictions, no smoking OF ANY KIND and no felonies and we still get TONS of people calling...the biggest problem becomes picking someone from who is left.   

And do the regulators regularly assess large fines for non-life threatening non-compliance issues?