Does this constitute her breaking the lease early due to her behavior and non compliance of HOA rules? 

If renting out rooms for varying lengths of time, but each is billed weekly, would this constitute a STR?

Another illegal taking under the Constitution.

  ( See Texas Constitution section 50(a)6 )I'd recommend using a broker who regularly works with investors  (I used Cendera but there are others) to find a willing lender. 

I can also almost guarantee that it would permanently end your ability to function in Real Estate in any form as it would probably constitute financial fraud.

The tenant called me and admitted that there are people doing hard drugs in the unit, two unauthorized people living there, and a slew of other things that would easy constitute for grounds of eviction.

However, being on the title of the investment property and filing jointly can have implications for your tax situation.To qualify as a material participant in a rental real estate activity, you generally need to meet one of the following criteria as outlined by the IRS:a) You participate in the activity for more than 500 hours during the tax year.b) Your participation constitutes substantially all of the participation in the activity during the tax year.c) You participate in the activity for more than 100 hours during the tax year, and no one else participates more than you do.d) The activity is a significant participation activity, and you participate for more than 100 hours during the tax year, and your participation is more than any other individual.Documentation, such as time logs or records of your involvement, may be required to prove your material participation.

Research what actually constitutes an employee vs. a sub.

The IRS could very easily find that all the door knocking and hustling and negotiating that goes into creating wholesale deals constitutes the provision of services and therefore a prohibited transaction with severe tax consequences.   

Regarding whether the actions of the sponsorship group constitute a bad boy clause behavior will be something to dig in more detail.