Many ignore the issue and have no intention of operating morally and ethically.

Are you sure they are legit renters and not put in there to boost up the numbers?

I want to do things, morally, ethically, and legally right.  

I'd recommend getting a few deals under your belt and to keep track of the results with the goal of using them as a confidence boost for future potential partners/private investors. 

Moral of the story-- I vote buy the investment property.

..once you are negotiating with the bank and agree on a NET PRICE to them, you can boost the purchase price adding in all rehab costs as part of the deal..you can even have the bank give your Buyers Agent Realtor a $2000 bonus which in most states your realtor can REBATE to you on the closing statement (limited to a max of up to 1% of the agents usual 3% commission..so there's probably a few extra bucks going to your realtor in the end and she will love you for that. 

You are in violation of at least half a dozend rules plus there are moral and ethical issues.

My husband and I are in our first NOMAD home with plans to use this and the conventional way of purchasing several buy and holds, as well as, lease options for some short term options to boost cash for the long term purchases.  

I needed a final, "move on" boost! 

Does anyone have any morality feelings about gentrification that interfere with an ideal purchase?