For a "conforming, conventional" loan (loans governed by Fannie Mae and Freddie Mac) they will use potential rental income for a purchase. 

Since your sister received a loan to purchase this property she would need to wait 6 months to receive a 'conforming, conventional' loan (a loan that is governed by Fannie/Freddie). 

For government loans, this is typically lower however, you would have to pay a premium up front and carry the insurance for life.

While it may seem asinine to you, the process has to be consistent throughout the portfolio and, the process is both regulated and enforced by both state and federal regulators....AKA the government.

new paint, upgrade bathroom vanities, upgrade laundry room, fix this, fix that, etc...the sale price is going to govern our budget for our next house. 

It is most likely a government insured loan you are applying for.

Such a pain and it’s not like the government will come in down the line and pave sidewalks at this property. 

@Etan Frankel although the government has a hard deadline of April 20th, 2018 to establish designated opportunity zones nation-wide, the investments wont happen for a short period afterwards while the IRS works on designating qualifications for the certification of an Opportunity Zone Fund.As soon as the certifications have been designated and the flood gates for applications are opened, i am sure you will begin to see many Opportunity Fund's pop up that would be eager to participate in the investment.

I've heard people refer to the return on T-bills as the risk free rate, but even that's contingent on the government remaining solvent :)There's no way I'd go through the trouble of operating income properties for a 10% return either.. and I'd like to assume most others wouldn't either.. although seeing some of the price to rent ratios for recent sales around the nicer suburbs in my area makes me question that assumption sometimes...All in all the thrust of the argument was that a reasonably competent investor should not have much trouble securing, at the very minimum, a 10% return on their capital without taking on excessive risk or administrative burden. 

Conventional or government assisted?