If you force enough appreciation, you could finance out some of the equity you created and use it to buy non-owner occupy rental property with 20-25% down, or sometimes less if you can find a seller who is willing to finance on different terms.That said, there is no reason your flavor of real estate investing needs to mean buying rentals right off the bat.

They're distinct documents.

It's an important distinction as commissions and credits go and can get confusing.

I think the challenge with this group of investors is they are taught from some guru who makes it sound like buying notes is the equivalent of going to the grocery store and picking an ice cream flavor (readily abundant and cheap).

There’s a few flavors of house hacking, pick one you’re comfortable with.

Starting out small gives you a chance to get a flavor of the real estate investing business, make sure that it's the right path for you, and learn about the industry while still generating a good return.Investing in smaller properties also has another important advantage over investing in large properties - diversification.

This is a very important distinction that a lot of investors miss - treating sellers of this nature, like dollars and cents investors, is a mistake and likely a big turn off to the seller.

If you purchase the other unit, you still have two distinct parcel IDs, two titles, two tax bills, etc, but it sounds like (or your lender is interpreting) that you want to refinance the whole building, which I've never heard of with a conventional mortgage.You can combine the properties to own the single building with two households (one parcel, title, etc) to refinance the whole building, but then you do lose the option to sell off one unit later (though you could rent it just fine).If you are just wanting to refinance the unit you purchase in cash, I don't see why the lender would want any changes to the HOA. 

@Robert E. the tax lien you are referring to is separate and distinct from the mortgage that is being foreclosed on.

They come in two flavors -public and private.