the positive cash flow goes to her in the form of option payments to reduce principal and are tax differed NO tax on it..

But you will have to commit time and energy to gain all the profits. 

I would suggest reducing your income numbers by 10%, increasing each expense by about 10% and then seeing what the model looks like.

Don't keep searching for a million ways to finance a deal, instead use that energy to start tackling the challenging of getting the funds.

It seems people are moving back in, but I think the primary driver is the reduced rent rates that motivate some people to jump back in and hope they can ride the wave up.It's too early to tell but I could see a shift in demographics as people attempt to escape the heavy taxes and regulation.

I think college kids have time and energy more than the typical commercial investor so use that to your advantage. 

When an appraisal comes in low, the bank usually reduces the amount they are willing to loan due to the low appraisal (unless purchase price is renegotiated.) 

My goal is to house hack or have a reduced mortgage payment by renting an additional unit.

My reasoning for this is reduced cost of having to furnish it upfront, more passive income for me for now, and lenders will be much more favorable to refinancing it with a long term lease in place + with this arrangement I could ask a premium for rent.

You can focus your energy on getting a deal with creative financing or continue to save.