Just from the two occupied units, his mortgage would be covered.

Even with conservative assumptions the deal seems to pencil nicely.Here's the catch - the house is being sold as part of a 4-property portfolio (the properties are in differing parts of the city) and it is occupied by a "PHA tenant" (I believe this means the tenant is backed by the city's affordable housing program).I'm wondering if there's any sense in still making this deal.

Fannie Mae's guidelines verbatim are as follows:Must be occupied by the borrower for some portion of the yearMust be suitable for year round occupancyBorrower must have exclusive control over the propertyMust not be rental property or a timeshare arrangement (this has the following disclaimer in the guidelines:  If the lender identifies rental income from the property, the loan is eligible for delivery as a second home as long as the income is not used for qualifying purposes, and all other requirements for second homes are met (including the occupancy requirement above).Cannot be subject to any agreements that give a management firm control over the OCCUPANCY of the propertyThis means that as long as you intend to occupy the property some portion of the year, you could absolutely rent it while you are not using it. 

Can a VA loan be assumed by investors as a non-owner occupied property, Veteran or not?

If a tenant isn't a good fit, I can choose not to renew their lease with a 28-day notice, as long as the lease is under 12 months and they've occupied the property for less than a year.

All properties were zoned for non owner occupied STR.

The VA loan is designed as owner occupy primary residence.

If you don't plan on occupying the property you will likely have to put down 25%.

The FHA loan is for a buyer that intends on owner occupying the property.

It helped them both be able to save and then use other forms of owner occupied financing.