So if you are staying in your area, we just purchase a single family home (SFH) with the 5% down or maybe a SFH with an Accessory Dwelling Unit (ADU...or otherwise known as a Mother-in-Law suite or garage apartment type of setup). 

There are at least 8 other investors owed money and 6 went together on a lawsuit trying to get their money back.

If they don't have their own entrances to outside, that may avoid the zoning requirement by making them more of a "mother in law suite".

Sounds like a lawsuit waiting to happen.

Also, I have become very interested in the Casita (or Mother-in-Law Suite) set up that some of the properties have out here, and definitely see opportunity there!

If you fail to follow the rules, you may open your personal assets to a lawsuit.

They may get a charging order if they win the lawsuit which entitles them to distributions (but distributions will never be made).

The plan is to purchase a single-family house (3 bedrooms) with a large basement or an in-law suite, so I can renovate & live in the basement/in-law suite while renting out the main part of the house.

That is the company upon whom lawsuit papers may be served, the same as serving you, if you are sued.

Do a google search for "foreclosure" and "lawsuits".