Legal entities won't qualify for a conforming residential loan --- they aren't allowed to have one. 

The point is that each State drafts it's own Real Estate laws and there is no requirement that they conform with other States. 

If you don't go over 4 doors then you are still in the realm of conforming loans, i.e.

Rent would be $800-1000 depending on if we can make it a 2 bedroom.I'll finish the kitchen in my basement so if I move out we would basically have 3 units (non-conforming) with positive cash flow.My partner can get a 203k loan if we find a property.

2) Sounds like there are 2 legal, conforming units and then a grand-fathered/accessory garden unit where you would live?  

Or a non conforming loan where the bank holds the paper?

@Matt R.The main thing I disagree with is believing that all cycles will conform to a certain length. 

Ask the inspector for a copy of their inspection form and then you can easily go through your houses and make sure they conform.

Your project does not conform to any normal bank's underwriting guidelines and therefore is difficult or "hard" to do.

They often have less restrictive requirements when they don't have to conform to Fanny and Freddie.I hope that helps a little anyway.All the best.