It sounds like you have spoken with an architect but it's not really clear to me what you believe you can build or renovate by right based on the current zoning and existing structure.  

.#3 At this point I would have a good lender or two in your pocket that have run different options for you based on what you qualify for loan wise. 

As you move further in your investing and have many properties, then you can start putting multiple together still based on risk tolerance.

Do you need a kick to get going every day or do you jump out of bed and get busy.   

If you don't have the "dough" you don't have the "go".Based on what you are saying you will need 20% down payment for a rental + closing costs + operating reserves (in cash).Most people will not have this--some will do what they need to do to get it--some will not, some can not.A good first step might be to save up as much as you can for a year in a special savings account--by living frugally for 12 months.Then explore down payment assistance programs in your area for first time home buyers of a primary residence--if you qualify (and the home is in a good area for your 'Family" vs Gunshot Alley, then buy a home for yourself and your family.Getting on the track of being a homeowner will give you some additional strength, after a few years of ownership, re-asses your situation.Or work 2 jobs and save the 20% down, closing costs and operating capital you will need, but if you do that and your wife divorces you for it, then you will be in a worse situation than you are now.In the mean time, [1] read Rich Dad Poor Dad, and [2] have fun with your family doing things together (while you have the time), rent a boat for an afternoon, go on a pic-nick, hike in the woods, etc...

I’ve spoken to other investors in the area and I am aware of the average nightly prices for similar rentals based on the seasons.

Based on my calculations, this would lead to cashflows around $700 per month.I am now looking more into FHA loans and wondering if that would be a better idea since I can only use this on my first property.

We are based on Maui and are looking for SF homes and condos to FF and possibly hold for LTR/MTR.

It's an asset based loan so most all the requirements will be dependent on the rent covering the debt so if you have cash but no stream of income it'll be the way to go.

Make a decision based on the numbers.