Hi Erica,I like the concept. 

I do understand at a basic level that this kind of zoning allows for a two story in structure in the back. 

Basically, I want to make sure that my tenants will be able to pay if one of them ups and leaves, disappears, or gets hit by a bus.Is it ok to require minimum income of 5x for household and let's say 2x for individual?

I agree with @Joel Owens on the financing side, basically as long a term as possible. 

Here is the basic criteria (learned from watching video on BP) I use: https://www.zillow.com/homes/for_sale/Phoenix-AZ/fsba_lt/apartment_duplex_type/7690658_zpid/40326_rid/0-150000_price/0-605_mp/Duplex_att/pricea_sort/34.112941,-111.386261,33.096143,-112.862549_rect/9_zm/0_mmm/Income:Expenses:TaxInsuranceUtilities:Repairs:Cap ExP.MMortgage:Misc: Cash Flow:Cash/Cash NOI: 

I did an extensive research and understand the concept of LLC as well as pros and cons of having it.

Some basics, House is 3-4 bedrooms 2 bath, old house with original wood work (pretty nice).

But basically the houses were listed for a few months and had a few price cuts and eventually been sold below the asking price.

It also mentions what the recourse is if you stop paying.A non performing note is basically a promissory note where the person stopped paying.

It is basically: you buy a home and live in it, rent out rooms (other units if multi family), and have the renters pay the majority of the mortgage, leaving you with extra $$ compared to the avg market rent for where you live.