The appreciation game is speculation, but appreciation in Socal (especially in San Diego) is a decent gamble. 

Gamble?

I am not sure if there are any BP rules or guidelines on this, as I am new to this page. 

Also CDC guidelines have some requirements the tenants have to meet. 

What makes a big difference is equity on the buyer's side.You will find that every loan guideline is about risk to the bank (LTV, FICO score, income, reserves, etc.).

We had actually gone under contract but then backed out due to the strict guidelines of this buildings HOA when we went in for an interview. 

As stated above they are slightly higher than that of the conventional financing but the guidelines for the loans are much easier than Fannie or Freddy backed loans. 

People buy because other people are buying.You are basically gambling and yes you can win big, but you can also lose big.

I have always found it best to use contractors wirh the designation as a Certified 203k Contractor - 203kContractors.comSorry to hear about your unpleasant experience with the 203k but wirh the right team, thousands of 203k’s get done every month.One thing to note about the HUD approved 203k Consultant, HUD guidelines require the lender to select them for the borrower. 

For those of us interested in the Kitsap Peninsula, another fun house hacking tidbit.   Bremerton is loosening up its ADU regulations with extra flexibility for existing unpermitted ADUs.
https://www.kitsapsun.com/st...