@Hunter Eidmann I’m not aware of any zoning that prohibits rentals.

Signing leases merely to sub-lease is not a business model and in 90% of residential leases is specifically prohibited. 

@Kevin D HooksThis is an absolute, 100% no-go.Your father is a disqualified party to your IRA.The IRS rules prohibit any direct or indirect transactions or provision of benefit - in either direction - between a plan and a disqualified party.Your IRA coming into this transaction saves your father's interest in the deal. 

Even when they know they can't take with them after 5 yrs. the lease didn't prohibit landlord selling the property during the 5 yrs.

I have read that having two FHA loans at the same time is prohibited except for the following reasons:Multiple FHA loansIf you currently have an FHA loan and want another loan at the same time, the second mortgage can only be granted under certain conditions.

More options promotes competition and is great for consumers, but it's also more to sort through.Prior to setting anything up, be sure to acquaint yourself with the prohibited transaction rules.

Most cities along the Wasatch Front have a rule that prohibits renting a SFH with a MIL to 2 parties. 

It sounds like any other sale, even though it is being done by auction.  90 days is Plenty of time to get financed, but you’d have to make sure:It’s zoned as residentialIt will appraise for your bid priceYou can have access for insurance and lender inspections/appraisals.It is in good enough condition to get a conventional loan, or you could take a shot at a 203k or Fannie purchase/Reno loan.The auction terms/details Should tell you if this is prohibited for some reason.  

BTW, as long as the lease payments cover your existing PITI, many lenders will take a high percentage of the rent towards you income, and it might 'ding' your debt to income ratio a bit, but probably not prohibit your going for another property/loan.  

You want to make sure your investment will be above board and avoid any prohibited transactions.