After he's gone I'd get rid of the condo with the unreasonable association.

That is a pretty big hurdle to jump if you plan on buying a new one every year with an average salary.

Despite a relatively stagnant population, the demand for housing in the area seems to be relatively high at the moment, and market prices are unreasonable.

Conventional you can do as low as 5% down but thats only for 1 unit property 2-4 unit properties will require any where from 15-25% down payment.FHA will allow you to purchase with 3.5% on 1-4 units however FHA has its own hurdles when you get to 3-4 units (these dont apply to 1-2 units) there is a rule called the SS or self sufficiency rule which requires 75% of gross rental income of all units to be > the monthly PITI in order to qualify.

It’s unreasonable to expect a landlord to rent a space for just ANY purpose imaginable.

If they are good at their job they are trying to find any potential hurdles to closing before taking a single cent of yours for appraisals, credit reports, etc. 

The whole picture matters, so this may or may not impede your progress, but based on your post it could possibly be quite the hurdle unfortunately.

With hurdles for additional returns

The only hurdle right now is raising the capital needed (around 2 million).

It is not a good measure of determining whether or not a particular deal is good, especially small rentals, except as a potential hurdle for further analysis.On paper your deal looks OK.