However, depending on where your rental community is located, local city/county ordinances could have those requirements.

Are you buying to occupy or rent out?

that way you can utilize a lower downpayment and potentially rent by the room?

Should we have lower rents compared to empty apartments?

It sounds like what you are describing is more like someone renting your basement space.  

They are worried about underwriting the deal to today's costs with the concern that rents might not rise to cover the additional costs (keep in mind, I'm in FL with huge insurance rate jumps...but other areas are feeling similar pain).

For due diligence, is it appropriate to ask for records showing current tenants are paying their rent?

Hello-I made a typo on the lease that stated rent would be late after the 10th or each month but it should have been the 5th.

But most investors are looking to rent out the property to cover at least these expenses and cash flow on top of this.

This will depend on the type of loan, size of the deal, experience, FICO, and property location.