You will have purchased the home under conventional guide lines and then have "No restrictions" on going FHA to buy the next home.

Too many restrictions, most don't make money.

Any deed restrictions or other reason why it can't be expanded.Since this is on the mls if this really was a good deal, any of the really good reno/flippers would have snatched it up before it went on the market, and not that its on the market reno/flippers would be all over this. 

The biggest difference between a townhome that has an HOA vs. any other props without an HOA are the bylaws & restrictive covenants.Some HOA's have investor caps & rental rules for short-term, etc. 

Amit,Not a list, but a key first item: wherever you intend to buy: check with the state, county and local municipality regarding any rules, restrictions or ordinances regarding STRs. 

Also want to confirm that they are a direct lender  If the poster is trying to get a loan is in the DSCR arena, licensing is not a requirement (and could be a detriment) and being a direct lender would restrict them to just the loan products their company has access to. 

There is always the Heloc path but those can gett you into trouble and have restrictions like shoter amortization, Prepayment penalties, interest only, (Can create bad habits of low payments) which causes a standstill balance. 

Just make sure there is no restrictions to the extended stay model in your loan documents.

The county imposing a mandatory fee, deadline, and penalties, without even knowing what their own standards are, and with admittedly no intent to inspect and enforce, certainly smells disingenuous, to put it nicely.

Quote from @Clay Watson: I'd suggest checking with a few more lenders to see if they have the same restrictions or if you can find a better deal.