With Providence recently passing the law requiring AirBnBs to either be owner occupied or outside residential zoning districts, I wanted to explore the option since the supply of STRs should be shrinking to see if it would be worth the added turnover and management.

I would start by calling the local zoning office or whoever sent the notice and discuss exactly what the notice means and then if needed I would reach out to an attorney.

After the seller knew I was checking with the towns conservation zones, he threw in the towel. 

My first call would be to your local zoning office. 

This should be a red flag.

Of course looking back I see lots of red flags along the way but I wanted to trust them and they were recommended to me by someone I trusted who now is no longer doing business with them.

There are a ton of variables like considering parking, allowable zoning requirements, etc, but just looking for an idea using this example:20,000sqft building, each apartment being 900sqft.Thanks!

SFR stands for single family residence, not 50 families cycling in and out, FNMA does not understand that concept (it is irrelevant that I personally do understand it), and I'm guessing your house isn't zoned as a hotel or hostel either (which is the question, and answer, if you bark up the commercial loan tree, which I have indeed done). 

I was told the other day someone did this and it raised a red flag to me, lol. 

I am currently in the process of trying to buy an off market self storage property that is in a residential zone.