If you are prepared to take that much risk with a partner I would say  take LUCK off the table and go for it. 

The Bay Area is definitely a unique market, but it's home so I figure I'll try my hand here first.For the multifamily, yes, I would plan on living in one unit.

Exactly - in addition, you're going to have to lay everything out on the table for the professionals you ask.  

I am inChicago and multifamily properties are quite expensive. check out some properties in the area you would like to invest in and figure out how much cash you are going to need to bring to the table.

All BP Nation- I have a unique dilemma that I will love to hear your thoughts on.

I have a unique option to use an FHA , going through a private lender, or partner.  

Looking for some insight on this unique situation - I tried to search for answers online and completely struck out.

They will be able to answer your questions and help you get a clearer picture of what a successful deal looks like.Assuming you need financing and you need a developer/operator in order to bring your deal together (which it sounds like), the people who occupy those key roles will make or break your deal and bringing a deal to the table that satisfies their requirements and that they view as a viable deal will greatly advance your learning as to what the critical factors are.Every market will have different dynamics which will affect your build to cap and it will depend on your expectations as well as the expectations of your investors and lender given the market you're operating in.As for stabilization, I typically see 18-24 months budgeted but a good operator can get it done in 12 with proper pre-marketing and solid market dynamics.Get a feasibility study done before you close escrow if you've already targeted a specific parcel.

One could also do a lease with option to buy, partner with the seller, get them to bring the difference to the closing table.

So, in multiple offer situations, you need to be willing to offer something that will entice the seller to take the extra risk (though usually very small) to accept your VA loan over one of the conventional loan offers on the table.