More specifically meaning if this was operated in one state on the west coast (Colorado) could you apply for a mortgage for a property on the east coast (Connecticut) and meet the mortgage requirements for pre approval. 

So if your refinance loan would approve you for a 75% loan....but you have 76% of costs, then you would need to bring 1% to closing.  

You can most likely get it approved through a zoning variance, but it is not a quick process.I hope this helps

He smokes marijuana in the property, made modifications to the unit without my approval and failed to get renters insurance.

We cannot hold both houses at the same time so we would have to sell our current house before we buy the second one.After talking to the real estate agent and the lender, they both have said to "get (FHA APPROVED) contractors on-site, instead of an appraiser, to give me bids on what it would cost to get the house "FHA loan approved". 

Goal would be to pay it off in less then 2 years over time if I wasn't doing a refinance-cash out (Which I have not done before so not sure if this is a full option).Family member is unlikely to be approved for two home loans at once so them doing an owners finance still makes it look like they have a loan with Bank 1, when they try to make another loan with Bank 2 it's unlikely their income will allow them to be approved, but this thought has crossed my mind.

Christian You probably have to get it approved by the city or the county.

I was offering to buy this as my primary residence with loan approval.

You do have to get the home approved for Section 8 tenants as well which will take some time so you'll need to account for that vacancy period as well. 

However, if the state does not approve your llc name, you will have to correct the check.