.: I don't think government will bail out home owners.

This is what is governed by FMR.

Here (and I'm assuming in most places), the condo association governs STR restrictions, not the local/county governments.

The challenge when renting directly to the government is that they expect below market rents.From what I've read in the past, most institutional investors look at these leases like US Treasury Bonds (extremely low risk) and expect a similar rate of return as bonds.Keep this in mind while you try to negotiate a rent increase.

When you do any agency loan (conventional or government) as a Primary Residence, you are signing a new 1 year "occupancy clause".

Do you know if there's a government agency I should contact about regulations for group homes? 

Ask for more government, and you’ll see what it’s like to be treated like a second class citizen. 

But that leaves me asking: If the Indonesian government indeed doesn't want foreigners to own/control land in the country, why would they allow for such an obvious loophole?

The government saw the housing bubble and changed guidlines with fannie and freddie to make the 10 down / 2nd home loan product very expensive (about 4 points to close).

Omg, the government is so smart.