The problem is with the high building regulations and high cost of construction, it is mathematically impossible to build "affordable" housing.

But the IRS has stated that it is not appropriate in a 1031 exchange where the is the intent to avoid taxes. 

If it’s assisted living many are going broke because of covid and post covid some regulations in some states required social workers to have nursing degrees so their expenses skyrocketIf its 55+ community and rentals etc, they have been hit and miss like other real estate

Each market has its own unique laws and regulations. 

Because of its seclusion, we can get away with circumventing the city regulations as code enforcement has no way to verify how much the property gets booked.

There's a very good chance the issue(s) you face have already been discussed and answered.Ask questions in the appropriate forum.

Institutional private lenders operate on a larger scale with more structure and formality, offering quick and flexible funding but within a regulated framework.

should regulations target the big institutional buyers? 

Not only do you risk Dodd-Frank attaching, but this could very easily be considered a consumer finance transaction (like a personal loan) - so TILA/RESPA/Reg Z as well as whatever state regulations will attach.

Keep your budget in mind for quality improvements, check local regulations and manage pricing.