Cash flows well at this 4% rate and the refi rate of 5.5% amortizated over 25years.My bank has said they do 75% LTV on the purchase price or appraised value, whichever is lower.

Anything lower is probably more of a retail buy for a market-listed property...but it just dependsAgain, returns are all relative to your personality and preferences. 

I can get a lower mortgage rate if I plan to use it at least two weeks a year, which I will, and rent it out on a short-term basis the rest of the time.

I want to try and keep my costs under that amount.  70% gives me a little buffer encase my Rehab goes over budget or the appraisal comes in lower than expected.Then it’s just a matter of subtracting all my costs to figure out what my max offer can be.  

And, try setting the price a little lower at first, then once you get a few 5 star reviews, you can raise the price.  

If, however, you are buying it with cash and without an inspection, you could tell the seller that you can close in a few days, which might let you negotiate for a lower purchase price.In the scenario where there is a loan with interest, and the interest is all your father-in-law receives (he isn't getting any of the profit after the sale), then he is indeed a true lender and this is a true loan/mortgage.

If you can be patient then you might be able to even negotiate a bit lower price.If he finds the perfect replacement property and you're not ready to close then a reverse exchange like @Jessica Zolotorofe would be another option to save the deal.

I will look at lower income neighborhoods if the return is strong, and it's a solid rental neighborhood.

Each subsequent week, I will lower it until I get a tenant that I approve of.

Additionally, I will add:-I don't think 38% expense ratio is being conservative, being at 50% is conservative and some buildings exceed this-bank won't even lend on a deal with a DSCR that low, you need to underwrite to at least a 1.25 or the deal won't get done-figure out what financing vehicle you're using, agency debt (Freddie) is possible at a lower LTV and interest rate but comes with requirements, community bank is tougher to get 30 year am on-I see nothing about exit assumptions, you might have to refi/sell after 5 years with higher interest rates and a softer market...then what?