I would recommend fixing it yourself to avoid any liability from the tenant and then try to get the HOA to reimburse you.

That's 50k a year gone and you are losing tax write-offs and equity potential.

Are there areas to avoid?

5 Tax Mitigation Strategies Every Real Estate Investor Should KnowAs a real estate investor, every dollar you save in taxes is another dollar you can reinvest into growing your portfolio.

There are monthly mortgage, taxes, HOA dues and insurance expenses each month, however this still generates great cash flow every month.

You think that in the event of a liability lawsuit, a landlord will be able to avoid notice of loss to their insurance by defending themselves with the coverage provided by the tenants renters insurance? 

The land is on two tax lots so my plan is to sell the extra lot immediately after closing for a projected $275K.The property on the other lot will be a fix and flip with projected costs of $240K and an ARV of $750K.I plan to use a PML of 2 points and 12% APY for 70% of the total cost.

That’s why many syndicators rely on exemptions like Reg D (506(b) or 506(c))—it’s not about the filing fee, but avoiding the regulatory burden and costs of full SEC registration.

@Bradley Buxton makes a very good point to make sure to do your due diligence as you won't be an owner occupant like your in-laws.Last bit of advice: Because this is a friendly deal, you want to take your time to make sure you structure it in a way that maximizes tax and cashflow benefits for both parties. 

Avoid PMI and then go to a local credit union and get a heloc after closing to gift the money back.Have this as a tool in your tool belt but pursue use of the 3.5% FHA, knowing that you will be at a competitive disadvantage if you are competing with non FHA buyers, then you can call in the favor from your gift person.Just know that if someone gifts you down payment money, your bank will require them to sign a letter stating that it is in fact a gift that doesn’t need to be paid back.