203k Loan to convert multifamily to 4plex

[Will Feetham]

Hi there! This is my first post on BP, I'm very excited to have discovered the podcasts and this forum recently. I've been listening to the back catalog and loving the amazing content. I'm selling a house on property in Oregon this spring and converting my other house in the area to an AirBNB, and planning to invest in mutli-family/commercial properties in the Midwest using the 203k loan program. To add value here, if you are looking to learn more about renovation loans this podcast is amazing: https://www.listennotes.com/po... The host can ramble a bit but there is a LOT of pure gold from decades of experience to be gleaned here. 

So, my question: 
I know you can "down convert" a multifamily property into a 4plex (or a single unit I suppose) - I also know you can have up tp 49% of the building as commercial space. This opens the possibility of income from a street level market or shops with 4 large apartments above it that were made by combining the previous 8 or 10 apartments. My question is: what is considered an apartment? Can some of the apartments in this scenario be converted to offices? What is the functional or legal distinction between an office that has a kitchen and bathroom and an apartment? Any insight appreciated, I'd love to hear about your experience doing one of these deals.