It is a common practice and comes at no cost to you.I would also recommend you require your tenants to get tenant's insurance and add you and your property manager as additional insured as well! 

The only payment you should accept is 100% in full, including late fees and court costs, and it has to be in certified funds (cash, money order, cashier's check).

Can try to reposition to Class B, but neighborhood may impede these efforts.Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.Tenant Pool: majority will have FICO scores of 560-620, many blemishes, but should have no evictions in last 2 years.

Thoughts on the cost of this? 

All that does is cost you more money. 

I'm afraid skylights might leak or increase the cost. 

Can try to reposition to Class B, but neighborhood may impede these efforts.Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.Tenant Pool: majority will have FICO scores of 560-620, many blemishes, but should have no evictions in last 2 years.

Cash-on-cash returns are what remain after vacancy costs, mortgage, and expenses.

You simply add up the “net sale price” (after removing selling COSTS, the mortgage isn’t a cost.) that how much you have to buy to avoid paying any taxes.

Down payments are still standard for FHA or conventional (3.5% of the total cost, purchase+construction) and rates are on par with standard FHA rates.