@Jeff BensonWhen investigating new markets I look for things likepopulation growth (upward over the last 10 years)Job growth 1% or greaterUnemployment =< national averageper cap income 20KHousehold income 3 times annual rentnumber of households (in comparison to other markets) Favorable government policies (is the local government looking to attract business) Those numbers will give me a sense of the macro market.

Have you just investigated 30 year conventional lenders?

We investigated some areas in Florida and observed some areas have minimum rental periods of 1 month versus 1 week. 

I must closely investigate two-bedroom flats to see if there are any opportunities in those.Radek

Prelim investigation..history of tenant/income/address verify/on time2.  

You really need to investigate the track record of anyone you want to work with prior to spending the money.Addressing your questions specifically....1.

We investigated upstairs and found 1 corner in the guest closet, behind some storage boxes that appears to have some amount of water damage (potentially).

I am not sure what the laws in Indiana are but I would investigate them thoroughly.  

Do you have any other recommendations for solid blue collar neighborhoods that I could further research/investigate?

HOA wrote to me that they hired 3 fence vendors to thoroughly investigate and extensively analyze the issues.