If the only MFH options you're finding are in areas you're not comfortable with, it might be worth focusing on a duplex in a better neighborhood.Saving up for a larger property later is a valid approach too, but keep in mind that real estate tends to appreciate over time, and waiting might make it harder to enter the market later.

How do you go about determining market rate?

I'm just here to note that an LLC does not offer a single tax benefit, nor does it allow any deductions that aren't allowed without an LLC. 

I use Facebook marketplace as my way of marketing my rentals.

I think any seller without much knowledge of being the lender would appreciate the added benefits and hassle free approach using a third party.

Since it is a family member and I would potentially buy the property for under market value.

Are you currently investing in your hometown or are you looking at out of state markets?

Look at all the population growth, job growth, and companies moving/developing here - it's absolutely blowing up and Columbus is one of the hottest markets in the entire US. 

I've been studying different real estate strategies and would love to understand more about how the permitting process is evolving in that area.Did the realtor mention any specific changes in local ordinances, or was it more of a general observation based on market trends?

This means having to take a chance and take the property off the market for 2 weeksOption 2- Accept the offer with a provision that allows you to continue to market the property, knowing that there's a chance FHA may not fund the deal.