Would you say that you personally are never in favor of purchasing a condo in a BRRRR, or buy and hold situation?

In my experience, FHA loans have more strict requirements for the home and generally offer less favorable loan options than conventional loans.

He said there may still be some loopholes in the tenants favor and you could have issues getting a judge to rule in your favor if the tenant shows loss of income or inability to pay. 

Is the ROI or equity gain favorable to convert the garage into a small one bedroom?

Laws are very favorable to tenants in NJ.

The property is very attractive for investors because it beats the 1% rule, is in a prime location, needs minimal rehab, and the market trends are all extremely favorable towards this property.

The price point is very favorable and the seller is very motivated to sell.

One offset to the rental argument is that you have to manage it (or at least pay for someone to do so)... that has it's own intangible cost associated with it that favors the flip to a degree if you are going to self-manage.  

I have friends and clients who are building their portfolios in areas about 45min to 1hr. outside the city, where prices are much lower and price to rent ratios are more favorable for rental properties.

We have friends from Chicago and while you can make some serious money there - they retired based off of many years of good rentals - you have a lot of tenant-favored laws and attitudes to deal with.