A high school friend of mine has a duplex little outside of Sacramento area but isn't really cash flowing and ate up a lot of his capital to invest in additional properties. 

In addition, exerting time and effort on properties that are not for sale is not worth it to me. 

If you're confident in your comps, it may be worth discussing with the appraiser or lender to see if there's room to provide additional context or request a review. 

We are looking at investment properties in Brooklyn, and found one we liked and want to add an additional floor (two stories as of now, would go to three), but the zoning is M1-2, which is commercial.  90% of surrounding properties are multifamily residential as well.

In addition I also offered cash and a quick closing timeframe.

There will be additional court filings in the coming weeks.

How does one take the owner finance situation to a bank and turn it into a 30 year loan to hold without an additional down payment of 20 percent ?

Would it  be possible to get an additional roommate where you and your boyfriend live?

Not adding any additional living space, just dividing the two units, putting a kitchen in one of them, and probably not having to add a bathroom to either unit.  

If they say put up higher railings, additional smoke detectors, etc, complete it promptly and document it.I've been in the landlord business for 20 years, and I've always kept my properties to code and well maintained.