Not sure if hard money would be the correct route to go for this one or not

They are lenders and not brokers correct?

Yes Mike, that’s correct.

If I understand correctly your siblings goals are to sell their rental properties, use the funds to purchase a primary residence they'll eventually move into, and limit their tax liability correct?

This is correct. 

If convicted of bank fraud you may be facing large fines of up to $1,000,000 and/or imprisonment of up to thirty years.Posted without comment.Okay, so one comment:Just because someone in your community says it's okay to do, better clear it with the feds first, or you may be talking with them later..This reminds me of a Subto in California that went bad and wasn't handled correctly. 

If I understood your reply correctly.

The problem is you can't afford to properly make repairs when you are dealing with the lower tier properties and go with the cheapest bids doing nothing but putting duct tape on issues that will become recurring or believing you are making the repairs correctly but use inferior labor and materials because its all the property can absorb cost wise.  

If the agent you work with is not familiar make sure the lender is, so you have someone who can confidently navigate this path for you.

Depending on the specific area, you’re correct in that cash flow is more likely than appreciation.