Lastly, any advice for finding the best mortgage lender would be extremely helpful! 

Comparable houses in the neighborhood are easily going for $300K + and more, so we're extremely happy.

But acquiring a multifamily here is extremely difficult.

To be more upfront, it's extremely time-consuming and you'll face a lot of rejection, similar to that of any sales industry.

I feel like it's one of those situations where it's not an egregious enough for there to be any real recourse, however, I find it extremely unethical that this person whom is supposed to be making decisions in the best interest of the collective owners is willing to break the rules to advance their own interests.  

Where I live in Los Angeles it is very common for a tenant to offer up-front money because the rental market is extremely competitive and good inventory is scarce. 

I decided to go the conventional route because with my savings at the time and my extremely average income level, that's what made sense to get me into a duplex.Hope this helps in some way!

The house is extremely distressed and needs a lot of work done.

Getting a contractor can be extremely frustrating especially if you need to make an offer without even looking at the property.

As you guys know, this market is extremely expensive.