I personally would not walk into an investment with plans to operate in violation of any HOA rules. 

Should I expect that with every inspection there will be violations that need to be addressed?

Once red tagged you are in violation and housing will be retagged and fined yearly.

If you start to do a lot of credit backs then it is going to look like a mortgage to a judge no matter what you call it - which violates the Dodd Frank act and you could get sued and incur hefty fines along with needing to return money to your tenant.

A transfer to a trust is exempt from due on sale violations since banks will view transfers to a trust as an estate planning tool.

I'd use that to warn them that they are violating the lease terms. 

If the Real Estate Commission decides to crack down on this, I'm sure they would find most wholesalers in violation of the law.You can certainly buy a property and then re-sell it yourself. 

The tenant has at least 2 additional people living there and a dog, too - three violations.

Also, I suspect there is language in your loan docs that says one act of forbearance (accepting your payment from the LLC), doesn't waive their right to object to future problems.To me, the whole thing boils down to 4 things:a) Are you technically violating the Due on Sale / Alienation clause in your loan docs?

Some of these may be in violation of fair housing, something I usually ignore, so you may want to check the rules first and decide what you personally prefer in tenants.