Generally, they're going to want to see that BOTH lots have:1) enough square footage2) Enough setbacks (old buildings rarely have the setbacks)3) Enough parking4) enough FAR, frontage, and possibly other dimensional issuesYou probably won't be conforming for every one of these categories.

Your best bet is to use Fannie Mae/Freddie Mac (conventional or conforming) money to buy your first 10 homes. 

During the Appraisal we found out that our lot is zoned R1 (So only one unit) and since there is second unit it is non-conforming.

They have to conform to government criteria such as the 10 property limit you mentioned.Portfolio lenders have more flexibility since the banks retain these loans in house. 

Example, Los Angeles High Balance Conforming limit is 679,650 or Seattle's is 667,000.

I’m dealing with a professional renter in a city decided non conforming unit.  

If i were in your shoes, I would go ahead and get a preapproval letter from a conforming lender just so you can see how much house you qualify for with them first. you'll get a feel for down, rates, amortization will more than likely be a 30-year, fixed rate, with no balloon and no prepayment penalties, and probably limited cost/ fees.

I could be wrong, it's been a while since I've worked on conforming loans. 

In my opinion, a CPA shouldn't just do the work for you, they should be educating you so that you know and understand how and why the strategies they are recommending will save you money AND conform to the tax code.Rentals are only subject to SE Tax if they are short term rentals where the average stay is less than 7 days AND you also provide significant additional services. 

They generally cost more but they are out there.Most of my answers are referencing non-conforming type loans, which are more expensive than traditional banks.