@Nicole Sorensen Hull I know that you are right, and that policies don't need to make sense, but I've never understood why this situation even exists.

My autopsy of the situation tells me we did 3 main things wrong:- We were overleveraged (heresy!)

We financed this home at 80% LTV through a local bank (here is where I would have saved my capital and gone with FHA or another low money down strategy had I had the foresight, but alas, "it is what it is" as they say).My plan is to eventually use 1031 to trade up to 8+ unit buildings, then parlay that into either apartments, mixed use, or commercial down the line.Going forward: House hacking the duplex is clearly not the ideal situation with a toddler and a newborn.

I bought a house this past May, and haven't had to put any money into the mortgage because of the room mates I have with me -they're paying under the market rate for this living situation, which covers the mortgage and another principle payment every month. 

So my idea is to try out buy and hold, and at a fairly high level (A/B neighborhoods, I guess), where dealing with tenants shouldn't be too stressful, even if the profits aren't as good.

Last, if issues arise, it may sour the situation between ourselves and the remaining tenants for the duration of their stay.

I've never run across this situation in this particular area and I'm trying to figure out how the numbers seem to work out well, the rents have remained pretty consistent, yet the price is beyond what it was at the peak in 2007.

I'm in a similar situation as you. 

However, this is a situation when they deny that their partner has moved in but it appears like they live in the apartment building.This may happen because of bad credit or because of criminal convictions that they do not want to disclose.

So you will begin your learning curve already situated into either (a) a riskier asset than other more experienced folks might find (b) with lower valued collateral which will typically cost more money to disposition (c) being taken advantage of your lack of knowledge in the asset class overall.