You won't be able to use conventional financing and must use a non-recourse loan which typically require 40% down.

I was wondering between FHA and conventional.

Two separate property appraisers (at the direction of the lender) were sent out to appraise, and neither was willing to appraise it as a "residence", and thus financing fell through (conventional primary loan).

As someone relatively young, obtaining a conventional loan has proven challenging for me.

For Conventional, you can only use 75% of the gross rent until you have Sched E history for the rental for a net rental income analysis. 

Yes you do have to pay PMI when you do this but once you hit 20% equity you can get it removed if you buy with a Conventional loan as opposed to an FHA loan.

Hi Makani,Conventional lenders tend to be stricter about requiring proof of income.

I know conventional lending could become an issue depending on the condition of the property.

Also, I am guessing that due to the state of the house, it would not qualify for a conventional loan?

There are conventional strategies and unconventional strategies to get started in real estate.