Turning an Owner-Occupied home purely into an investment property

[Brian Zintel]

Good afternoon everybody!

I'm in process of investigating my next investment property purchase, and would like input based on others  experience. 

My investment strategy focuses on multifamily properties with little cash down and positive cash flow.  A background on my first purchase made nearly 6 months ago.

Purchase Price: $208,000 (5% down w/ $8,000 credit - First Time Home Grant) 

Unit 1 (Rented) : $1,250

Unit 2 (My unit, Projected income) : $900

Projected (monthly) Income: $2150

Mortgage/Taxes/Insurance: -$1415 / month

Water/sewer/user fees: -$60 / month

Electric / Gas = By tenants

Repairs: -$170 / month

Fix repairs (Furnaces/Roof/Water Tanks): -$50 / month

Less Vacancy: -$215 / month

Total Monthly income = $2150 - 1910 = $240

Cash on Cash return (Money out of pocket at closing: $10,500) = (240*12) / (10,000) =  27.4% / Year

The icing on top: Both roofs for the garage and home are brand new, and the home inspection came through clean. The lower unit had also received a remodel 2 years ago.  The rental area is in high demand, and is an established area. The development / real estate market in Buffalo is on fire right now. 

A second home purchase will typically require a 20% down-payment, and those lending requirements become even tighter for multifamily homes. Some lenders vary from the 20%-25% mark but I'm thinking conservatively.

Other than finding homes willing to be owner financed, what options do I have, with less than 20% down? 

I've found conflicting information for purchasing an owner-occupied home. I'm willing to move to another property, but I do not know if the money down requirements decrease if an owner-occupied home is purchased as a mortgage for a second home. 

Say I can buy another multifamily with less than 20% down, and I need to occupy that home, I will forfeit my $8,000 grant, which will require my to pay $500 / year until the remainder is paid off, therefore my Cash on Cash return drops to 23.7%

Your inputs are greatly appreciated!