Out of curiosity, how are they going to verify that, do I need to prepare some sort of proof I have actually lived there for the 2 years?

When a target property surfaces, be prepared to act on it within HOURS not days.Be prepared to show a solid proof of funds (not a print-it-yourself POF from a hard money site) and to submit a reasonable offer (most likely 97%+ of asking price).And if you have a good agent, you'll get that property under contract and start you due diligence. 

If the tenant shows up, you want to make sure your case is bullet proof. 

We were also advised by the inspector before the sale to get the chimney inspected and install a glass front on the fireplace (currently it's just the mesh screen.) 

I may just bite the bullet and do it. 

We are fortunate enough to have some cash buyers that purchase rehab and refinance after stabilization and repeat.I agree though there are plenty of properties out there being bought with rose colored glasses that may never make a decent return.

(Currently, there is no minimum number of days you have to live there for it to be considered your primary residence.)Require evidence of neighbor support or at least proof of notification of neighbors.

Showing within 24-hours after accepted offer with proof of funds or lenders pre-approval"...something to that effect...just depends on your market and state requirements.

Just put in your offer with some proof of funds and see what they give you.

Researching private and hard money lenders online, all lenders want a house under contract before releasing funds, however, working with a realtor, they want proof of funds prior to showing a house, let alone putting one under contract.