Yes, @Ben Walker what most fail to realize is that what you described most likely is a Security and thus you must comply with all of the Federal and State securities laws.  

You need to ask the city, what is required to comply.

We will be living on the house for 3 years, we can not have roommates since my son is immunocompromised and he can get sick super fast, and is hard to force strangers to comply with all the required sanitary procedures to live with us.We want some equity, and we will like to learn the real estate business so we can do this once we get out the current situation.Thank you

This is addition to determining what construction and associated work would be required in order to comply with Multifamily building regulations.

So, if the bank requires 10% down or 15% down that's what you have to comply with.

I was told that it was to comply with PA's "wet funds rule"......

You do need to exercise some care to comply with SAFE act though.But of course, they are buyers, so they aren't renting :wink:

Depending on foreclosure laws of your state if I financed you and you put nothing down and stopped paying I would have to foreclose to get the property back.I could have a deed-in-liue provision as well but if you don't comply I have to foreclose.

You also want to make sure that you comply with the correct notice limits (i.e. 30 or 60 days usually) and that also applies to raising rents over a certain % in some states.

However, I need to be living in a unit to comply with the FHA loan so effective gross income is $5100/month.$5100 x 12 - 50% operating expense = $30,600 NOI$30,600 NOI/ $420,000 price = 7.3% CAP $30,600 NOI- $26112 mortgage = $4488 Cash flow in the first year, or $374/month$4488/$14700 down payment= 30.5% return first year.After the first year, however, I will be moving out so that will be an extra $1,300/month in rent so...$6,400 x 12 = $76,800 gross income$76,800 - 50% operating = $38,400 NOI$38,400- $26,112 mortgage = $12,288 cash flow in the second year, or $1,024/month$12,288 / $14,700 down payment = 84% return in second year.Is this a good deal?