I am here to learn as much as possible so I am not wasting peoples time or more importantly their money!

Consider starting small by house hacking a single-family home, renting out rooms, or adding an ADU if possible.

Actually, it is possible do structure a 1031 Exchange on the sale of one or more relinquished properties and then using the proceeds through the 1031 Exchange to construct improvements on real property you already own.

Naturally your property must sell before you can take title to the new one, but nothing prevents you from getting it under contract and make the process as smooth as possible.  

Then rent the bigger home out using a property manager, allowing her to possibly cash flow and maintain that asset and let it continue to grow in value.Encourage her to consult with a CPA or tax attorney to explore the best strategy tailored to her situation.

There are ways to mitigate the costs and protect yourself to the extent possible.

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.

It is like you and I are arguing about there being life on Mars, we go to Mars, and I SHOW you an alien that is shaking your hand proving to you there is life on Mars yet you still argue with me that it is not possible because of x, y, and z, when the alien is shaking your hand!

Your aim starting out should be to get the best reviews as possible and use guest feedback to make improvements as you go.

It is possible to permit after the fact.