It's more likely that the lender is holding $5500 of the seller's proceeds in escrow at closing to pay for the repairs (if the seller had the money now, he'd probably have already fixed it).In my experience, when lenders do an "escrow hold back" like this, they base it on 2-3 reasonable estimates, then add a safety margin to that. 

Health and safety?

One federal court of appeals held that such a blanket ban violated Title VII, stating that it “could not conceive of any business necessity that would automatically place every individual convicted of any offense, except a minor traffic offense, in the permanent ranks of the unemployed.”Although the defendant-employer in that case had proffered a number of theft and safety-related justifications for the policy, the court rejected such justifications as “not empirically validated.”

I would imagine if a buyer was bringing a larger down payment credit would not matter because there is a higher margin of financial safety for the hard money lender.

Analyze the local safety, political, and economic circumstances and get a feel of long term general (urban, industrial, infrastructural) development.

But also it doesn’t fit my goals and I consider it risky—I am a newbie so I need a margin of safety on my cash flow for when I enviably mess up.If you can’t cash flow at 20% down, it means the return for rents are subpar (or interest rates are very high).  

They even check doors for safety.  

Lots of variations in quality and safety of the neighborhoods here in Cleveland. 

Unless there are obvious safety issues, etc. good chance he will say nothing about that bathroom.

It looks alright as is but wasn’t sure with it being an exterior door if it would be a safety concern.