Quote from @Aaron Zimmerman: I would look for other ways to legally reduce income such as cost segregation studies.

It will cost the seller more time and energy to sue you than collect on the EMD.  

I have dabbled in real estate, but never heard of brrrr before now, and transparently never did much research outside of knowing that property ownership was a way to reduce my taxable income. 

Contributing to a Solo 401(k) or SEP-IRA can reduce taxable income, and Section 179 or bonus depreciation lets you deduct equipment costs upfront.

Then ask them what your options are to reduce payments in the future.

Focus on optimizing the current fourplexes (improving rents, reducing expenses).

This takes a little more work, but it's the fairest and reduces the likelihood of tenants that squander utilities.If you choose #2 or #3, there are considerations:Start with an average.

To intentionally reduce the leverage more than required is a foreign concept to me especially in the San Diego market.  

Given the permitting timeline, I will offer to purchase some of the furniture and redecorate the rest (so half and half to reduce some furniture building time).

Freddie has similar intricacies, but also does not require a two year history of receipt; https://guide.freddiemac.com/app/guide/section/5306.4If you can use the rental income to drive the DTI down so that you can reduce the down payment similar to that of the FHA product, the benefits of the conventional option will outweigh the FHA option, as I'm assuming you have a strong FICO based on rate quoted with no points.