CA House 1 rents for $2,310 my mortgage is $1,362 @ 6% ARM.

House-hacking or arms-length?

We explicitly tell them "no other visitors or guests are allowed at the house under any circumstances.

I know our brokerage arm typically charges 5% that is split 2.5%/2.5% with the selling agent (buyer's agent).

This would allow borrowers with reduced incomes to pay reduced amounts during the three-to-five year period, according to the FHA, which is an arm of the Department of Housing and Urban Development.

So get ready for the short-arm inspection on every job you've every done.It's worse than some mafia shaking you down, and it's perfectly legal for them. 

It greatly helps if those consequences are explicitly stated within the contract to speed up the process and make things easy, but even if they aren't it doesn't mean that one party can unilaterally fail to perform with no repercussions. 

The transaction is not "arms length"3.

Redfin just shut down it's flipping arm and is laying off 13% of staff:  Bloomberg article

Lots of borrowed cash can lead to sloppy management.There are lots of lenders that will charge you an arm and a leg to encumber your dad's homes.