My goal, over the next five years, is to utilize real estate in lieu of my current hourly consulting income, by building a portfolio of rentals.  

Since I was only filing on major things like underground utilities, fires, etc.

Replacement homes will be climate hardened, smaller, functional and include consideration for the type of infrastructure, architecture and sustainable/durable materials utilized. 

Most likely raising funds from passive investors would utilize a Reg D 506 b or c safe harbor exemption from registration.  

To minimize capital gains tax on the sale of their primary residence, your in-laws can utilize the $500,000 capital gains exclusion, potentially explore an installment sale to spread tax liability over several years, or consider converting the property into a rental to use a 1031 exchange for tax deferral eventually.

Hopefully any regulations that get passed will be logical and not overly heavy handed (not holding my breath, but here's hoping).

Another option would be to utilize a property manager to manage everything and keep a buffer between you and the tenants.

You will have to gather more accurate operating costs (vacancy loss, taxes, utilities, insurance, mgmt fees, maintenance, HOA) to best determine potential future performance.

And have you thought about building back utilities?

Did they also do utilities and roads, or was that left for builder?