Fannie Mae states the following:Fannie Mae’s April 3 clarification of the “Second-Home Rider” shows that homeowners are allowed to rent out a second home after one year of ownership and that short-term renting during the first year is also permitted under specific conditions The following eligibility requirements apply to second home Mortgages:·The Mortgage must be secured by a 1-unit property·The Borrower must occupy the second home for some portion of the year·The Borrower must keep the property available primarily (i.e., more than half of the calendar year) for the Borrower's personal use and enjoyment·The Borrower may rent the property on a short-term basis provided that the property is not subject to any rental pools or agreements that require the Borrower to rent the property, give a management company or entity control over the occupancy of the property, or involve revenue sharing between any owners and the developer or another party·The Mortgaged Premises must be in such a location to function reasonably as a second home·The second home must be suitable for year-round occupancy with the following exception: a second home with seasonal limitations on year-round occupancy (e.g., lack of winter accessibility) is eligible provided the appraiser includes at least one comparable sale with similar seasonal limitations to demonstrate the marketability of the subject property.

There are REOs that are in better condition than owner-occupied sales.

I was wondering about liability if he gets injured by the condition of the house.

We visited the house multiple times before it was leased to ensure everything was in working condition,  got the house professionally cleaned.

@Sagiv O.Would you be kind enough to detail what types and conditions of properties are you looking for?

(Basically the expenses you can get reimbursed for are those necessary to "maintain" the property.)As for the 10-year limit, the third link I included in my previous post talks about that and the various conditions under which it can/will expire (i.e. 10 years from the date the liability was assessed plus 30 days, if not refiled).I know, lots of reading to do

I agree, set up and have them sign something regarding the current condition of the property, to go along w/ the pictures. 

Over time I started to see that the home looked barely touched and was in “fair” condition with some real visible signs of wear and tear.

The fact that they made 5 trips and left it in this condition is very alarming (personally, I would consider sueing anyone that left the job in this condition unless they told me about it and we agreed to it).Additionally, given the condition and arrangement, I would simply plan on a full replacement, as the arrangement of the equipment is not typically, making it very serviceable, and its likely the equipment is older and does not have alot of useful life left. 

One of the owners responded and we have been able to negotiate a deal.  12 unit apartment complex; 6 two bedroom and 6 one bedroom units. 1960s, single story, slab construction, four sides brick, C condition, fully rented.