Here are some diagrams to help you in your quest for answers on this subject:Asset Protection Decision Diagram - to help assess the need for asset protection, and what to implement : https://www.biggerpockets.com/files/user/CosIorg/file/asset-protection-decision-diagramAsset Protection Onion Diagram - what, when and at what cost one should implement in terms of asset protection - https://www.biggerpockets.com/files/user/CosIorg/file/asset-protection-onion-diagram-v2What is needed for a complete asset protection OR the domains that need to be intersected to find asset protection

However, I'm concerned about the high monthly payments that come with shorter loan terms.

If you get caught doing a STR in areas they are not allowed, you will most likely get a warning at first, and then they can fine you if you keep renting out short term. 

Prepayment penalties- usually 1-5 year terms.

It requires the borrower has significant experience and is very costly (in terms of rates/origination)It's generally really risky to do 100% financing especially if you are inexperienced.

This might affect your equity position and future refinancing options.Subject To Financing: Taking over the existing $325k mortgage is a common strategy, but make sure to thoroughly review the terms of the existing mortgage.

Yes & no - I see what your perspective is in terms of doing due diligence, but its up to the current owner to allow you to do that. 

You can also hold the security deposit for those repairs (if you've stated those terms in your lease agreement).The short of the long here is that they're in violation of the lease and you are able to take action.

You will get almost always get better terms using conventional financing. 

There’s a plethora of tools out there, but looking for advice on where people have had the most success that has gotten quality long term tenants?