The FHA will require that the rental income (with a market-derived vacancy of between 5-10%) from the additional units in 3-4 unit properties cover your total PITI+MI expenses (principal, interest, taxes, insurance, and mortgage insurance). 

The above examples are just for illustrative purposes, you'll need to find your own market derived rental , vacancy and cap rates.Good Luck!

Market value of multi-family properties is derived from the NOI (net operating income) divided by Cap Rate.

Or is this option really just a benefit for those who invest in high dollar properties, thus allowing their depreciation to always be much greater than any rental income they could hope to derive from the property, giving them a perpetual paper loss?

From an investors perspective the value of the property should really be derived from the market value of the rental income and ultimately net profit that can be derived from the property.

Just to make it fair let's say tenant pays cash non traceable so u dont have to claim income"Treas Reg §1.61-1(a)General definitionGross income means all income from whatever source derived, unless excluded by law.

Even though my income is 100% commission and 100% derived from the business that I generate I cannot write off anything. 

I certify that I do not intend to, and will not, use any list of names or addresses contained in or derived from public records for the purpose of selling or offering for sale any property or service to any person listed or to any person who resides at any address listed..."

Always look what successful people are doing and more importantly what they are NOT doing.. and then... no.. do not copy... but extract the characteristics, commonalities, of their behavior, and derive that equation/formula for success.I do this always.

Because one of the pillars of the “Howey test” is that the profit derived comes from the “efforts of others.”