As a foreign investor I think you will need to leave 35% of the profits parked with the IRS until tax time - which means you'll have to file some sort of US tax return.

If you're going to be the only member of the LLC, someone forms an LLC mostly for liability protection but if you have more than one partner then it becomes a useful vehicle having an agreement between the members as to how to run the business and split profits and such. 

I would like to rent it possibly, to keep from losing money on it and maybe generate some cash flow, but I'm not sure it's possible with the HOAs.

Disclose to the end buyer and the agent so that it is transparent that you are buying and reselling to them4. the end buyer should either be buying cash or their closing company know about the option so that there is no issue with underwriting with the buy n resell5. make sure there is no stipulation with the short sale lender that does not allow you to flip, Some have restrictions on the flip and or for % of profit.6.

If the property is at least 80% tenanted, then you have something to show the lender that proves the property is generating cash flow.

Besides, paying taxes means you made profit.

I think the price they paid is not really material here because at the end of the day, they own the asset now and will be looking to maximize profit and limit holding time.  

Personally option 1 feels more like a year round business if that is your main focus to generate income.

I live at parents because I just sold home in December and made about 30k profit.

I live at parents because I just sold home in December and made about 30k profit.