Find all the absentee owners in your marketing farm area, send them a letterPay for ads in as many publications as you can afford; Wanted - houses - commercial and non-conforming real estate - can pay cash but would prefer some owner assisted financing.

A quick look at Freddie Mac's website on maximum conforming LTV (http://www.freddiemac.com/singlefamily/factsheets/sell/ltv_tltv.htm) confirms that if you were to purchase a 2-4 unit multifamily as a primary residence, the maximum a lender could finance if they wanted a conforming loan would be 80% LTV which requires a 20% down payment. 

You should make sure that the conversion conforms to existing code requirements (e.g. if it's a bedroom, it better have a window for fire escape access).  

A conventional mortgage conforms to guidelines set by Fannie Mae or Freddie Mac and unlike an FHA, VA or USDA loan, it's not backed by the federal government.

Most of the lien law related forms have to have very specific language to be effective, hence the reason for the state produced forms, to conform with the law.  

The only thing that matters is what is agreeable to you and the seller.You will have an idea on what is agreeable until you have a conversation to find out the sellers motivation to sell.Once you have an idea on the motivation, try to make an offer that will help with their problem, but at the same time conforming with your buying criteria.You do not need a real estate agent, but a relationship with a good one is important to have.

Some general rule of thumbs in the conforming Fannie/Freddie market are 6 months seasoning before a cash out refi is allowed up to 75% LTV.

Hey Tiffany, I personally think buying a non conforming duplex (your option 2) in the best way to go for the first house.

The mere fact you know about his/her professional capacity acknowledges a disclosure has been made as to licensing.Acting in the capacity of a principal the landlord can communicate with the prospective tenant without a requirement to communicate with either his/her broker or the tenants broker.However, the landlord is subject to conforming to listing and commission agreements.

could be non conforming use.... so banks wont go on it.but if I read you correctly he is paying 150k for the whole thing and putting 100k down and wants a mortgage for 50k ???