Your best bet may be to explore building an ADU on your existing properties, or to buy a SFR and build 1-2 ADU's. 

The existing apartments have better cash flow.

I have a 2000 sq ft home that needs added drywall and sanding of existing drywall to match the new drywall.. 

That said, opportunity still exist for a house hacker to make it work.  

The thinking is...For the formerly incarcerated likely to have issues making payments, it'll be reflected in the other existing criteria.For the formerly incarcerated not likely to have issues, they will meet all the other existing criteria.Think about it. 2 convicted drug dealers.

So, if you sold the property for $300k, including a $120k mortgage, you would need to exchange it for a property (or multiple properties) worth at least $300k and take a loan of at least $120k.A lot more rules exist, as @Wyatt Franta described, so don't try it on your own.

It doesn't exist. 

Keep in mind also that the violations did not exist at the time of closing.

We've spent the past year 'force appreciating' our existing 3 bedroom/2bathroom house by completely finishing the unfinished basement.

Our existing city water psi was more than adequate & I was permitted to use 3/4 Pex throughout.