In the Install Guide, Procedure 3.2. Configuring the Self-Hosted Engine, step2, add iSCSI as storage option.
PRD bug: https://bugzilla.redhat.com/show_bug.cgi?id=1067162
*** Bug 1154354 has been marked as a duplicate of this bug. ***
*** Bug 1121820 has been marked as a duplicate of this bug. ***
The updates to these topics match my experience with setting up a hosted engine on an iSCSI SD.