Ultimately you need to pick one that is good for your income, career, real estate, and can provide you the answers you are looking for while building wealth through the tax code loopholes provided (all legally of course).

Her mortgage right now (minus the condo fees cause she can't pay) is way cheaper than rent.She will not have any place to go, but she may be able to salvage her credit if she sells to me.Landlords will become even more strict when screening after the rent moratorium ends.I just refinanced, my mortgage is really low.I was also thinking buying her unit, living there, and she can rent my unit, as an option if she brings up being priced out of rent market.

For me personally, I focus on up and coming areas rather than the hot zip codes that people are flocking to so instead of #1-5 in growth areas, maybe 6-10 is more reasonable for you.

I still have strict business policies that I stick too because at the end of the day I'm running a business.  

Personally, I would be pretty strict about those.

We put in new floors and bring the water heater to code and fix all the immediate issue with the get the renter ready. 

@Jenny BayonI would tell your father-in-law to sell the residential real estate in California given the strict landlord laws and rent control and reinvest in self-storage or in another state more landlord friendly.

While there sometimes isn't much strict enforcement of the rules by the city (like imposing fines, or forcing you to comply), I'm not surprised that a lender wouldn't be willing to count the income from a rental unit that isn't technically allowed. 

What zip code is this house in?

FHA loans come with PMI and more strict property requirements.