We submitted a short sale package to his lender and they approved him for a FHA Waterfall modification with a 3 month trial period. 

Submit on my website and we ACH deposit into your account Inspection required to verify work completed Day 1: request Day 2: inspect Day 3: wire funds to investor (business days) DP Or Reserves required Minimum of 6 months liquid reserves - Checking/Savings-MMA/CD/etc.

In this market, it’s not worth submitting an offer on a potential flip without removing your inspection contingency.

I am doubtful that the seller has been approved for the variance for a 2-unit, and am wondering if I should move forward to submit an offer without it.The mortgage company should be able to finance the loan, but my question and where all the risk lies is on the exit. 

Because they aren't reported (officially...sometimes realtors will submit the sell price to the MLS, but it's unofficial and optional), it makes it a bit more subjective, when calculating comps, but it means your property isn't going to be revalued just because of the sale.

When a target property surfaces, be prepared to act on it within HOURS not days.Be prepared to show a solid proof of funds (not a print-it-yourself POF from a hard money site) and to submit a reasonable offer (most likely 97%+ of asking price).And if you have a good agent, you'll get that property under contract and start you due diligence. 

I submit offers 80k less than asking to see who bites. 

Go through it carefully, or ask an attorney for help.You want to show that you're serious about closing when you submit an offer.

I have a potential flip that I'd like to submit an offer on. 

-Interviewing/screening tenants (interviews, background checks) and managing property.From my RIA I learned there is software you can have your tenants submit their info to and it will run a background check.