The actuaries realize they have too many policies in one area and the insurance companies want to reduce risk and spread risk. 

By living in one unit and renting out the others, you reduce your living expenses and generate income.

If you ever found your self in trouble you sell a property and reduce your debt load and obligations. 

Increasing your down payment can indeed make the asset cash flow positive, even if it reduces your cash-on-cash returns.

I should look at house hacking as a way to reduce my living expensesAll of that makes sense to me but in my personal situation, I live with my parents for free.

But at this point I am going to reduce it to 2 questions so I don't give you a headache. 1) if a property is being sold as is, is that an automatic disqualification?

I thought about doing a partnership return with my wife since partnership returns are audited less, to reduce the size of my 1040, but my CPA said it was not worth worrying about. 

By accelerating your depreciation schedules, you reduce your taxable income which in turn increases your operating cash flow.

If portfolio growth is not the goal, then it definitely reduces some of the risk on your side including third party risk (the bank being a party with a vested interest in the property), but also yield adjustment risk.

It could help you get a lower rate or reduce closing costs.Good luck with your house hack!