@Hilary Hageman Also keep in mind that my "un-sellability" perspective with SFRs is more rooted in my California experience.  

Any higher and it would be a red flag for the bank underwriters (rules are rules).

At the root of the situation the bank underwriters job is to protect the bank and as a secondary protect you from yourself.

Obviously a red flag and would want to get a termite report in this case.Your broker is correct about surveying.

Where the red fence posts are and to my hand in the way of pic is the separate piece of land that i feel I would need to purchase with the house to really make it saleable.

.- If there is an HOA, there could be association laws forbidding the rentalOtherwise, denying a person from purchasing real estate could be red-lining and sort of really illegal.... of course the best way to find out is to ask the person who told you.

This sounds like cosigning to me which is a huge red flag. 

I suppose I am just a little nervous making such a large investment when I am constantly seeing RED in my cash on cash ROI.

"can you change the color on this letter from red to blue?".

Every time I slide a check into the ATM at my bank, I hear that voice from the little red button on the counter at Staples, "That was easy!"