Since it's a two-unit property, the loan limit is substantially higher than the $271K that everyone thinks of when they hear "FHA loan".  

Single member LLCs and their subsidiaries would all be reported on your own tax return.Partnerships and more specifically Family Limited Partnerships are my favorite.A side note NEVER EVER hold real estate long term in a corporation. 

Either way, I agree that it's not fair that it comes out of HOA funds but unless you want to sue, your options to force their hand are limited.

Or, does that limit only apply to Fannie/Freddie loans?  

I wouldn't bother with the $250 limit.  

We have had limited success when we have tried to shop the package. 

So obviously if the area has hit that limit then bar owners or liquor store operators probably wouldn't be your target market.  

Now, cash-on-cash return ratio has its own limitations, the principal one being it is only a single point in time.  

Second, it's a 1 bed/1 bath so obviously that limits the pool of renters. 

While  with the foreclosures you can do limited work and still get a great value.