HAVING SAID ALL OF THAT; Leaving one unit 'open' as your primary is mortgage fraud and never a good idea.

"It's only cheating if you get caught", or "If you're not cheating, you're not trying" and so many other colloquialisms illustrate this point, but mortgage fraud is a federal criminal offense, so I would urge others to proceed with caution.

No one on this thread is advocating fraud or theft. 

Be safer to get a regular investment mortgage than to commit fraud.

You have to agree to live there for a year, so bear that in mind.FHA has an entire department of people dedicated to finding "occupancy fraud", so don't even think about it. 

Essentially identical to a sale with owner financing but the deed stays with the seller.Yes, you can 1031 into such an arrangement as long as the contract has been written so that in the terms all of the burdens and benefits of ownership have transferred to you. 

Mortgage fraud?

As the other comment says, this plan is technically loan fraud as well so how will you avoid the legal implications?

When more returns are audited and more bank information is available, it is easier to identify the fraud.

The neighborhood has some identical 4-plexes on it that are currently renting between $600-$650.