If you see utilities increasing, is there a way that you can push this on to the tenant?

The down side is that STRs are more work, need to furnish it, pay for utilities and WiFI but in the right market (vacationers and business travelers) it could work. - If I were looking at cash flow as a really important important metric, I'd consider starting a business.

The first apartments I rented as the owner, were previously rented by the former owner at $150 month including utilities. 

That's the reason there are so many fourplexes and so few fiveplexes or even sixplexes.From what I gather, post offices and utility companies rarely care much about the permitting/zoning issues, so it probably wouldn't have been hard to get those set up.

Making such a hasty decision on two weeks worth of knowing these people as your customers seems like a rash decision to me, but I don't know exactly what's going on, and sometimes personalities just do not mix well together.

There are quite a number of things that can make utilizing an FHA loan more difficult such as more barriers during appraisal, appearance of low qualification/little cash, typically longer closing period, likely higher interest rate, and PMI cannot be dropped without a refinance if 3.5% down.That said, just chain 5% down conventional loans, and make sure your duplexes pay for themselves.  

I Offered it to them at 10% below market with him paying utilities. he wanted it, so I screened him to verify he can afford it.

I would count on having at least half market rate tenants, in the event Section 8 rents are higher than market, which they are in our market (granted you will need to subtract the utilities from the rent).  

Utilizing the VA loan is a good first step in terms of investing.

Is there a way to utilize part of my Traditional IRA funds as a down payment on a SFH investment property without being penalized?