Since this will be our first long distance investment it feels like we're starting brand new and would love advice for first time long distance investors.

This is really a lot of information packed into a densely worded post.Yes, you can use loan proceeds to buy out another member, but it doesn't seem like you'll have enough to buy out and develop.

This is dangerous territory because you are talking about your family.

But it's playing with fire to buy there if STR is a priority as it's very likely they will eventually start enforcing it better.

Try to find experienced, straightshooters willing to do some coaching in the markets you like. 

Quote from @Saquan Johnson: I would reach out to local rehabbers in that area and also higher-producing agents to get this info.

As you know, this part of CA is nothing like what most people associate CA with.

There’s no percents of the rental mortgage or anything like that. 

I always like to look at several years worth of property taxes.

I have several homes that I’d like to appeal the property taxes for.