@Teri S.You'll always have the prohibited transaction rules to follow, but checkbook control would alleviate at least some of the issues you mentioned.

When the time comes for rates to come down- assuming that you didn't get a good interest rate in the first place- then you can refi it with the new rates to alleviate your monthly expense (namely mortgage). 

Alleviating most of your mortgage through house hacking can be a successful investing option because you can save up another down payment while someone pays most of your mortgage and repeat the process every year or two.  

If you can shop around and get a lower interest rate that will lower your monthly payment that would help alleviate your risk of not qualifying.1) I am in NC so cant speak for CA2) I would 110% go with an FHA loan instead of a jumbo loan.

A homeless man took shelter in the house, which could be alleviated by eviction or other means.

Turnkey would be a great option for you if you don't have the time, effort, money to spend in the industry and if you have the right provider it can alleviate the risk for you.

Do I need to live in the property if this is a sub-2 on an FHA loan or do I just have to alleviate the owner concerns around all the risks such as the "Due on sale" clause and other owner concerns.

Putting down 30 -35% should alleviate their concerns.  

A two story veneer brick facade should have been installed with control joints or expansion joints to alleviate the stress of movement.

The main goals with selling the property are to: 1.) shelter the proceeds from sales/inheritance tax 2.) alleviate the monthly expenditure to an outside landlord 3.) provide a long-term investment for both siblings 4.) shelter (by transferring of title) what has become Mom's sole asset from being garnished should she need long-term care (nursing home, etc.).