Hard money loans can be the way to go, but very hard to implement in a competitive market, which leaves you with a 100% cash purchase plus repair.  

Our bank is going to implement a blanket loan such that our equity is collateral.  

after many years of investing in real estate (20) my proudest "moment" is when one of my kids started watching what I was doing so she could then implement it.

Consider partnering with those people by providing the capital for lease/furniture, and have them take care of the property (owner) search + tenant search, then come to an agreement on cash split and responsibilities, go from there..Long answer short, I don't feel that local economics should slow the implementation and growth of this/your model, but doing it with the right properties locally and also diversifying with operations in different markets will help cover your exposure if things start slowing in a specific industry within a specific market.

More than likely, this property would be an out-of-state purchase, perhaps a multi-family, depending on my options, and implementing a buy/hold strategy. 

You're a new investor ...they sensed this and you don't live onsite and are managing the property yourself ....and yes your tenants talked to each other.Now is the time to be firm and better late than never.Go over with the tenants the expectations as set forth in the lease as to when rent is due and what the penalties are for being implemented and be firm.One tenant will possibly try to "test you".... and if they do you need to follow the local laws regarding g eviction ...otherwise they will run all over you.

So my question is, if we implement a policy of let's say no more than 3 total people per unit because of the size, will I have to ask my inherited tenant to leave since she is month to month?  

I say try to organize what you can now (get your product on the market), then iterate and implement improvements from there.

As stated life is not fare but in business you make it fairer by implement ridged protocols.

I was thinking about implementing the subject to strategy just to obtain a property here.