I can’t dwell on this considering some have had way worse issues.

First day... but if they're good tenants, I remember their birthdays, give Christmas cards, and certainly, have no issues asking them if they have thought of seeing their dr.

If possible, during rehab, address some things that will help you insurance wise later:- full upgrade of the electical- full upgrade of the plumbing- removal of any sheetrock, trim, etc with lead paint- new roof- address any drainage/leaky basement issues- hardwire smoke and CO detectorsI know not all will be able to be done but most are cheaper during a big reno and will make you a better risk for the insurance companies. 

It's a bit more money up front, but they last longer, they're more durable and have less issues with water or humidity.

You should also review the contract terms with an experienced attorney to protect yourself against issues from the contractor or their employees.  

The first FHA inspector/appraiser did not make an issue of it.

I have done this with several properties and haven't had an issues using this method. 

She claims she has other children who she has cosigned for out of state without issue.

I feel he’s full of bs.I explained to him that he signed a one year lease and that we’ve never had noise issues/complaints before but that I will ask the other tenant (who has lived in his unit for years with zero complaints from anyone about noise) to keep his TV lowered after a certain hour.There is a clause in my lease that says he will have to pay 3 months rent if he needs to terminate the lease early.

You biggest issue is your dead equity due to the lost opportunity value.