Would this be the ideal market, or are there other rental options we should explore? 

I am slowly going crazy with how expensive Massachusetts is and I am leaning towards looking at cheaper foreclosure properties.I understand there is some risk to this but I am beginning to think this is the only option I will have because of how fast the market is growing.Thank you for any insight you may have!

Creative financing options like seller financing or assuming a low-interest FHA loan can also help you secure better terms.

I would start there and think of anything that I could do to stay in the house for a while as it sounds like you would be losing a bit of money with the other options. 

Consider house hacking by purchasing a multi-family property with an FHA loan, or explore creative financing options like seller financing or partnering with private lenders.

Talk to the seller, but options are to cancel the sale (and risk losing your deposit), renegotiate to lower the price to allow you to fix the problems or ask them to fix it. 

Be prepared that they will be promoting an optional mentorship program at the end.

Rates may still be high, but sometimes they’re more flexible with repayment options than a mortgage refi.Family Loan Structure: Since you have an existing interest-free loan from family, you could talk to them about restructuring or even adding onto it, if they’re open to it.

My goal is reviewing retirement options. 

If they do need financing, then speak with your lender about their new build financing options.