The lawyer for our HOA had a different interpretation of a similar clause.Renting a property out for short term for somebody to sleep in and use as a temporary dwelling "probably" conforms to the usage of a property for residential purposes. 

.• In a low-density cluster development if it conforms to development standards of the R-1 zoning district, and the development and use standards of the low-density cluster permit.ADUs are allowed:• In R-1, R-2, and R-M zoning districts on lots that have one single-family residence.â�¢ On lots with a single-family residence In Planned Development (PD) districts that are subject to R-1 standards and uses OR the ADU conforms to the development and use standards of the PD district.• On any lot with an existing single-family dwelling unit, where regardless of zoning, the lot has any of the following General Plan Land Use/Transportation designations:- Residential Neighborhood- Mixed-Use Neighborhood- Urban Village or Urban Residential- Transit Residential or Rural Residential- Downtown- Mixed-Use Commercial• On two-family (duplex) lots and on multifamily properties• In a low-density cluster development if it conforms to development standards of the R-1 zoning district, and the development and use standards of the low-density cluster permit.Minimum Lot Size3,000 square feetNo minimum lot sizeMinimum Setbacks from Rear and Side Property Lines0 feet for 1-story conversions and new construction.5 feet for second-story ADUs constructed above a garage or accessory structure.0 feet for 1-story conversions and new construction.4 feet for second-story ADUs constructed above a garage or accessory structure4 feet minimum rear and side setbacks required for detached ADU in multifamily developments.Maximum HeightFor detached ADUs:Single story – 18 feet maximumSecond story – 24 feet maximumAttached ADUs are subject to the height limits of the main home.Single-family properties - No change in height requirements.Multifamily properties - 16 feet maximum height for detached ADUs.Rear Yard CoverageArea covered by the ADU, accessory buildings, and accessory structures, except pools, shall not exceed forty percent (40%) of the rear yard.Area covered shall not exceed forty percent (40%) of the rear yard or up to 800 square feet, whichever is greater.Detached ADU Allowed LocationsRear yard only, at least 6 feet away from primary dwelling.May be attached to a detached garage or other existing accessory structure.Must meet minimum setbacks for an accessory building in accordance with Section 20.30.500.No changes except that ADUs that exceed forty percent (40%) of the rear yard must maintain minimum 4 foot side and rear setbacks.

@Clint Morris You can have up to 10 mortgages with Fannie Mae and up to 10 with Freddie Mac for a total of 20 conforming, conventional mortgages. 

One that handles certificates of non-conformity. 

Getting a conforming Fannie Mae/Freddie Mac type loan for an LLC may still be possible, but its a pain.

It could also be the renewing nature of the non-conforming house that could be turning buyers off. 

@Andrew PostellAndrew -This properties are both in Connecticut.The 5 family commercial property has about a 37% LTV.The 3 family conforming property has about a 68% LTV.Thanks in advance,Andrew

When I use the term conventional I really mean a conventional, conforming loan (A Fannie Mae/Freddie Mac loan). 

Have Joe purchase the home for $275 from a conforming/conventional financing broker.

@Victor G. a standard "conforming" mortgage won't do this.