Ultimately they sided with my brother in law and that the downstairs tenant was being unreasonable and was told to leave. 

it may not be possible to buy ahead of time and I still think those types of restrictions are unreasonable. 

You consider that reasonable but simply even sending an inquiry to the tenant about it offering to put them on the lease once they pass the BGC is somehow unreasonable?

Section 8 will deem their asking rent "unreasonable") I'll explain it again (speaking s-l-o-w-ly): Section 8 uses the HUD guidelines for fair market rent which are based on the 40th percentile of a moderately priced apartment in a  given zip code.

On the other hand, if I put myself in their place, they get a letter from me saying I want to buy their house, I don't think it's unreasonable to ask them for a number. 

I build houses and that is unreasonably high in my market.

Some react quickly/unreasonably to what they read, rather than sleeping on the information they just received. 

But if you're sourcing deals to flip that isn't unreasonable.

So unless you are willing to categorize all of the Ohio State Legislature for the past 50 years or so as "Unreasonable, crazed bureaucrats with an axe to grind" then I suppose that might be accurate as well. 

Thanks to the leverage you get with an FHA loan (a 25 multiple), it's not unreasonable that you could see your $11k turn into $150k.