Plus, I like to ensure that the owner has reserves for his property.

There are FTHB bridge products where are you need is a 640 score and 9 months of reserves.

Real estate is so localized that most federal based policy changes don't have massive influence.I can see him (semi-)privatizing Freddie/Fannie.

As for soft costs, you’re looking at a fair amount for a condo conversion-there are legal docs to have drawn up, reviews, surveys, recordings, setting up the HOA, reserve studies etc.

That said, if you can afford it and have the reserves, and more importantly think you have a decent chance of increasing revenue with the vacant units then I'd probably go for it.

The loan is with you, not with your tenant, so none of that means anything to them - in fact because you live in one unit and it's under 4, if you were self-managing you don't even have to abide by fair housing laws (at least on the federal level). 

Mostly due to the fact my spouse and I agreed on her to have zero involvment in any sort of RE investing (and its our home) I think once you have a good 6-12 months of reserve cash (operating expenses for your own life saved as a back up incase things go bad) save enough liquidity to get the ball rolling on your first invesment.

We have 2 phase one properties reserved in Bennah Oaks.  

Make sure there are no Federal Pacific electrical panels. 

I also have some cash reserves that I plan to dump into a contingency fund for each unit.