Limited Regulatory Oversight: Fintech companies that operate without a banking license may not be subject to the same regulatory scrutiny and consumer protection measures as traditional banks.

They cater to the smaller door count companies and investors. 

Your VA loan does not transfer to company structures.

No offense, but you want to act like a company or business to make money, but you don't want to take responsibility like a company or business.

Is this common practice or a sign of a bad property management company?  

There are various opportunities to employ different strategies in the multifamily space.  

There are many alternatives you can use, I would urge you to check your local laws but I know here in Cleveland, OH we can charge an increased deposit or we can also require a guarantor (who can have different credit req. then someone living in the unit) It's important that no matter what you do you do it for everyone going forward, making exceptions for screening for some but not all can become a Fair Housing issue. 

If I want to use the STR tax loophole, would living in a different state affect the advantage of the so called STR tax loophole, as long as I remain active in managing the property and fulfill the other requirements?

Pregnancy is covered under Fair Housing laws (familial status), so not renting to her (or treating her differently) because of her pregnancy would definitely be prohibited. 

I hire a company to do the advertising required.