Even wholesaling is an option... though I'm considerably more leery of that one. 

When someone is exploring where to dump a ton of money, it would be smart to explore all options...not just the city with the best weather and tacos :-)

So the only option is to pay in full and then buy the house, which makes the price way up.

That's a perfectly good option if you're up for it.Remember that the goal of a house hack doesn't need to be to 'eliminate' housing cost entirely. 

They also assume the rent-by-room option is the best way to go because they can get multiple nurses to share a home so they want to buy a larger home, thinking they'll rent out all of the rooms and make more money.

You have a few options here.

That's typically not an option.  

Two options I see as a landlord 1) If lease has been violated, eviction notice could be sent. 2) Request a new lease be signed due to new terms (whatever I decide they may be) and then not approve the adult child to be added.Has anyone else dealt with a similar issue or have a recommendation?

Is Private equity buy out or REITs a feasible option..etc?

No need to guess fnma makes guidelines available to everyone. https://selling-guide.fanniemae.com/Selling-Guide/Originatio...Do It Yourself” OptionThe “Do It Yourself” option is available for renovations made to one-unit properties by the borrower.