However, PVC can break fairly easily so PEX has generally replaced it for supply lines."

It sounds like you can demonstrate that she did have the intent to hold for rental/investment purposes but that the CC&R and/or HOA rules do not permit the rental of the unit, which you can easily prove to an auditor.

He says that this property should be easily sold between 200 to 225K.I asked him that some comps are around 140K and he mentioned that we will do some high end rehab with some modifications(adding extra bed room) which should give an ARV ~225K.

He has zero chance of winning a general election.

So  I can service both states easily.    

with 30k per door to get a multi bought, fixed, and ready to rent and rents around $700, we see 15% cap rates easily after maintenance management vacancy pads.  

If this is something you can do and be the winning bidder you will be able to make a lucrative profit doing so. 

Win/win as I see it .... win if they pay me off and I get my interest, win (since I do my diligence) if they don't and I get the home.I am putting together people with lazy money to go after the deals...always a good returnmy question is I hear the term 'predatory lending' .

Win-win-win, for you, the developers and hopefully the end buyers of the residential piece of property. 

With the $1M you could invest, you'd easily be able to get into a facility large enough to achieve all that you stipulated as your goals.