I talked to a mortgage loan officer and they say my best option is to cash out refinance, in order to pay back my family member.

And or course, short term loan for HELOC and then refinance later.

Can the principal balance be satisfied with income from the property or will a refinance be required?

When / if rates drop you can refinance and re-deploy that equity into other cashflowing assets. 

From there you can refinance out of the fha loan and go again.

ANY responses that help me refine my vision and learn different perspectives are appreciated beyond measure. 

After he met Jimmy Napier, he refined his technique based on Jimmy’s advice.  

The tried and true way is to purchase a off-market property, rehab for no more than 75% ARV, refinance to get your money out or payback the private hard money loan - start short-term leasing the property.

The 10-year US Treasury yield retreated on Tuesday, accelerating recent downward momentum. 
The yield on the 10-year Treasury slid almost 8 basis points (as of writing) hovering at 4.158% following remarks by Fed Cha...

They hope they take the building back because large amount of equity can be created when they do ultimately refill the building with a national, credit tenant and resell or refinance the building to hold.