The pocket thing seems nice as long as you could control who moves in and who does not move in. 

You will never get that back in terms of additional cash flow

Simply put the concept of live in one unit rent out the other is not a strategy, there is much more to successfully house hacking in NJ. 

@Olecia Williams I am local here in Florida and help clients all the time purchase second homes that they short term rent with 10% down with zero issues.

Wishing you success, let me know how I can support you!

I suspect even the banks who are aggressively expanding are doing so merely to sure up their geographical presence  to in order to expand their customer base but will then pull back on their branch numbers.Unless there is significant term remaining on the lease, there are other retail concepts that would be deemed more marketable.

The two are almost entirely different markets in terms of price points, returns, tenant quality, and overall investing strategy.

Working with the city to find a solution.There is a similar situation near me where an investor bought a short term rental house, rehabbed it, ran it for a while, and then got in trouble with the town after a neighbor complained and the town said short term rentals weren't allowed in the community. 

Each option has its advantages and disadvantages.Finally, think critically about your long-term strategy.

Personally, I advocate for a long-term investment strategy and would recommend investing the funds, provided you are comfortable with the expected return on investment over time.