Quick question, it makes sense why I wouldn't be able to utilize the FHA in that scenario but are you sure it would have to be 25 if i went conventional route?

Have a second full bath, even though it was in the basement, came in handy more than once.Here's the mistakes I made1) I included utilities for ease of payment.

They will get the utilities going and they said they could have a bid to me for the work needed within 48 hours.

That end is making enough to pay utilities, living expenses and to get health insurance.

My friends that chose the middle did so since they thought that utilities would be cheapest since they were in between 2 units so bottom floor heat would rise up in the winter but not too much like the 3rd floor had which increased cooling costs. 

There are some interior cosmetic improvements I plan to make utilizing the cash flow of the property over the first year.

If the one spouse has a consistent history of late payments to utilities and such, then I'd be more hesitant.

Based on my formula (8.3% vacancy, 10% repair, 5% CapEx, 10% prop mgmt, plus mortgage/prop tax/insurance and utilizes), I came up with $400+ in monthly cashflow and ~8% CoC ROI.

Smart thermostat or programmable is always a good idea for energy savings (more important if you are including utilities).

Tenants who pay utilities themselves might appreciate the fan to cut back on cost of having AC running.