So if some of your restrictions are no longer enforceable then you can 'violate' those without fear...another common one is no additional dwellings or structures which would apply to ADUs, where I am they are legal state wide and cannot be restricted by HOAs or private restrictions.  

I just saw the part about FHA not being an option. 

If not, are there non-construction options that would be a better return on investment?

I'm desperately searching for a financing option for my spec homes that will give me better terms than the 10-12% interest plus $10k closing costs that my current HML is giving me.I tried doing buyer-financed, but they haven't been selling very well (although I really haven't waited long, I'm just impatient).

So there are several good options here in the Ohio market. 

So I plan on going with the FHA 3.5% down and hopefully going for something in the 3-400k range in a neighborhood like back of the yards, mt greenwood, south shore but also open to other options.

(I told him we have other options, but I would rather that he gets to make the profit instead of the bank.)

You will then have a few options with that rent money....you can put it into principal or you can start saving it to purchase yet another property.

Seeing a lot of success when people have an unemotional optionality for the project and simply run the numbers when the project is complete - put it on the market for sale and for rent and then plug it into a pretty basic spreadsheet!

If you are looking for a generic 80-90% of purchase to fund with a good FICO score for a normal 1-4 unit, you don't need to spend too much time on finding lenders as you have plenty of options.