The loan was limited to 50k and no more than 50 percent of the balance of my 401 could be borrowed.

Look to banks minimum loan amounts, if you go below $67,000 a buyer begins needing to pay more in cash and that limits your market, it's less marketable the lower you go. 

would there be any changes during this process from FULL authority to LIMITED?

In my limited experience not only is it very local but quality of the unit/tenants.

I have very limited knowledge in this field and am seeking guidance and instruction in route to mastering the profession.

So you will have very limited competition.Also, the owners clearly like you or they would not have approached you.

A con is that it will limit potential buyers to only those that will use it as a primary residence.  

So my question is this, do small banks set a limit to the amount of houses or money lent, you can acquire using this method,  assuming all new properties have adequate cash flow and equity once rehabEd? 

You learn really fast who has been in the business for some time and who is stuck at the open house and has limited experience. 2.)

After much searching I found a company called limited resources which makes residential coin laundry conversion kits.