It's not a New Jersey thing, it's the IRC code. 5.7 Sfhttps://buildingcodetrainer.com/egress-window-requirements/

The price of the house ($1.4m) requires me to secure hard money lending to purchase. 

The purchase decision only requires online thorough research, then try to buy in a 401k/ira so you don't have to pay taxes on the Dividends which can be large.

The goal of real estate investing is financial freedom.Financial freedom requires a rental income that:Increases faster than inflation: Unless rents increase faster than inflation, your true (inflation-adjusted) income will continuously decline, and your time off the daily worker treadmill will be short.

In NJ, for example, we rep a ton of landlords and require 3.5 months up front to rent which get you a better tenant and screening as we go through the NTN or rent spree (first month's rent, 1.5 security, 1 month realtor fee split between listing agent and rental agent).

First, you have to buy it on the courthouse steps to claim ownership - that is required to rent out the property.

DC will require you to have 2 egresses, so you will need another door, or larger windows (with no bars). 

A bird dog looking to meet your requirements and standards!

Should I waive the escrow requirement?

They fall under the $400 SE income threshold for filing and do not require tax returns.