And the other 30% can be credited back on my taxes through the federal program!

Navy Federal Loan Officers have explained that even moving to a "larger house" or "better area" justifies as good reasons.

The difference between your adjusted cost basis and the net sales price when you sell is the profit you will pay tax on.Tax when your primary intent is to flip is at your ordinary income rate which could include federal, state, self employment, and ACA surcharge (as much as 40% depending on where you live and pay tax).  

If you live in this area, and you are a federal employee, you likely make a good income, as incomes are the highest in this region than anywhere else. 

I am thinking to elect federal taxation as a sole proprietor (which is possible as a married couple in California).

I'm currently house hacking a 2-unit building in Federal Hill.

If you have defined criteria for applicant qualifications that do not discriminate or violate any local, state or federal laws but still serve your needs for finding quality tenants, that is the best method for protecting yourself.

First, Unless MN is different then 90% of the US, You do not 'own' the HOA, The HOA is a legal entity created at some point in time. you may have controlling votes in decisions when the HOA brings then to a vote, but unless the document created at the time of the formation of the HOA says something differently you are just a unit owner many times over.Second, Depending on how the HOA was set up, The HOA may be under the Direction of a Property ManagerThird, You must follow all Federal,State,Local laws regarding the HOAForth You must comply with all HOA rules  for each individual of your units regardless of how many you ownFifth while it might be enticing to go all Pirate King, remember you have to follow the HOA rules or you may be subject to fines and lawsuits or both (In MD there is a case in the courts where a renter had problems with the unit owner and the the owners of the unit are being sued separately by the tenant.

I'm a Federal HR contractor at USDA. 

I am looking to connect to with any house hacker in Harris county regarding (federal and property) tax setup for the split use.