It’s just not smart.Second, with an FHA loan, any title company that handles the subto transaction is ignorant of the regulations/published guidance which forbid it. 

Depending upon whether they are a bank or a trust company, custodians are heavily regulated by the IRS, DOL, possibly the FDIC, State Banking Commissioner, and the Comptroller of the Currency.

You can't move forward on ANY strategy until you know what regulations are going to apply to your property.

We were initially told that this would not be possible due to regulation.

You'll need reliable local contacts, such as property managers, contractors, and real estate agents.Regulatory and Legal Differences: Each state and municipality has its own set of real estate laws and regulations.

What are you thoughts on STR changing local regulations? 

Forming a Homeowners Association is a good idea, but can a HOA legally enforce rules and regulations on neighbors who do not comply?

However, it’s important to weigh the benefits against the obligations and regulations involved in the program.

A couple questions.. what are the regulations associated with doing this?

Understand Local Regulations: Dont forget to do your research.