As I'm sure everyone knows, the housing market is pretty locked up right now.

My wife is from a country that does not allow lending or loans to acquire housing.

This is more of a reach goal for me since I am still in my "collect 4 green houses before trading up to a red hotel" stage, but I thought I would ask the hive mind anyways.

I plan to purchase a primary residence, multi-family home (2-5 units, 'house-hack'). 

This will show you that people have options to go out and pick another house over your place. 

In some of those areas there are those row houses, built on lots that are 3000 s.f. sometimes.

The place I have is over 30 years old and a mansion ("mansion" in Japan means an apartment, not "mansion" like a huge house). 

So back to being a real estate investor: the only way to be one is to buy a property and create value out of it, whether through finding a below market value house and selling for a profit, or renting and creating cash flow.  

When it was time for inspections, they told me, I can’t do that and the area is not deemed for multi family- which is a lie because both houses on either side of mine were duplex.

House hacking is an excellent strategy, especially with the potential to use an FHA loan to secure a property with a low down payment.