Networking with local investors that have an intricate knowledge of your area is another key to success.

And while I maintain that intricate LLC's not only provide great asset and tax protection and are fun to scheme with your CPA and Attorney they are usually more than a beginning investor needs. 

I have a family member who has found themselves deep in financial trouble and they are wanting to sell their home to me at a massively discounted rate to pay off their debtors. The catch? They want to pay me rent to c...

You might want to look up gifting funds for the down payment.  

If anyone is gifting you money to help with the down payment be sure to have it done well ahead of your application and have records as FHA has fairly extensive documentation requirements.

"Once the right place is found I'll call my mom about a gift letter I know she will".

Doesn't mean you can't use PM just gifts calculate for that amount of space.

If they are offering you 3% then I would also ask if they have the 1% option where the lender gives you a gift of 2 of the 3%.  

Issue is, with proposition 13 and the step up function for cost basis, and makes holding on and gifting the property.

She can't get gift because of investment.