To find a house where the seller is willing to sell it to you Sub2 the existing loan you need to do quite a bit of marketing.

Many nightmare stories about house next door a drug house, or issues with that location or street that would not be known until you visit

It is zoned multi-family and I could do 14 or 15 straight townhouses but the City in question, while they immediately adopted the latest ADU rules, has archaic multi-family land-use regulations centered on a large apartment complex mentality that are costly for infill / middle housing  (1.75 off-street parking spaces per unit, major landscaping requirements, "amenity" requirements, unreasonably large setbacks, etc.). 

Hey everyone,My parents have recently told me that their house is too big for them (4 bedrooms) and they would like to downsize to a condo/townhome. 

We provide housing for Homeless and Addicted people in underserved communities, and in an attempt to revitalize our Downtown area, and expand our Program (part of it is home ownership and entrepreneurship) we need to be able to buy adjudicated properties, or have them donated, then have the finances to redevelop and repair them. 

We actually run a brokerage here in house as well so incentivizing our agents here first is a no brainer. 

In what state such regulation or law exists?

Buying an existing place that needs upgrading might be more sensible but it will still cost a lot of dough.Plus the purchase of the catamaran.

We have been starting the process to get these houses rehabbed but the program is not implemented in every municipality yet and it takes time to go thru the courts.    

With that said, I don't love multi-family housing right now and it is far outside of the metroplex.