It’s been a long journey to get to this point, and we even had a failed attempt with another PMS (but I’ll keep those details to myself).

I have started investing for a few years and had some good results with a few GPs but even those GPs who had been coaching other people had really bad results this year (mainly no distribution).

I personally would stay away from condo-tels as they will be even worse and you'll have less opportunity to cash flow. 

What are some of the best areas or even zip codes that would be good to buy a rehab property?

IIRC, RW even charges hourly rate fees if a property consumes too much time. 

Seems like the only neighborhoods where FHA is even a possibility is cypress hills / east New York or east Flatbush, among other further out areas I don't really want to live in.

Even at $2200 I don't expect to get a positive cash flow for the first year, but that's okay as long as I rent it out and learn from my mistakes for my next investments.

Why even concern yourself with the legality if it’s self serving and harmful to your family member?  

I've included an example below to help illustrate this.So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.See example below:DSCR < 1Principal + Interest = $1,700Taxes = $350, Insurance = $100, Association Dues = $50Total PITIA = $2200Rent = $2000DSCR = Rent/PITIA = 2000/2200 = 0.91Since the DSCR is 0.91, we know the expenses are greater than the income of the property.DSCR >1Principal + Interest = $1,500Taxes = $250, Insurance = $100, Association Dues = $25Total PITIA = $1875 Rent = $2300DSCR = Rent/PITIA = 2300/1875 = 1.23If a purchase, you also generally need reserves / savings to show you have 3-6 month payments of PITIA (principal / interest (mortgage payment), property taxes and insurance and HOA (if applicable).

The intricacies tax planning with a rental are worth hiring a professional, even if you just do it once for an overview.