Wholesaling sits "outside" of the regulated arena, sort of. 

Because there's a thin line between you and Paine Inc. and a lot of opportunity for mischief, the IRS scrutinizes this structure very closely and has strict regulations on how they are ran.

I've read posts on BP about this sort of thing becoming a syndication, a fund, etc. which is all regulated by the SEC. 

Even regulators in the bank sector treat multifamily differently than other CRE assets, and that is because it has an inherent risk aversion to a market cycle.”While class-A apartments will certainly see some dip during a recession, workforce housing should remain stable if not better performing as demand for attainably priced units increases.

You should review the ADA and any local laws and regulations you have about accessibility.

And then there's HOA and city regulations etc.

Not sure If there are really any regulations for this or not.

@Lonnie Thomas I pulled this from hud.gov that regulates FHA loans, hope this helps4155.1 5.B.4.aDescription ofGift FundsIn order for funds to be considered a gift, there must be no expected orimplied repayment of the funds to the donor by the borrower.Note: The portion of the gift not used to meet closing requirements may becounted as reserves.4155.1 5.B.4.bWho MayProvide a GiftAn outright gift of the cash investment is acceptable if the donor is the borrower’s relative the borrower’s employer or labor union a close friend with a clearly defined and documented interest in theborrower a charitable organization a governmental agency or public entity that has a program providing homeownership assistance to low- and moderate-income families, or first-time homebuyers.So if you can document the relationship of the gift giver from one of the above it may help.

Which NJ regulation says he cannot do this ? 

I would check your states laws and regulations first.