I guess we can't have our cake and eat it too.

Share examples of similar setups nearby (as this is indeed common among small multis)"Eat dirt" - you eat some dirt (or crow or what-have-you) and you have this installed. 

They could pass another stimulus and prolong it even more but eventually someone’s got to eat the costs and it won’t be the banks (it will be the homeowners) unless we put the tab on the taxpayer in an unprecedented move.

The accrued interest, late fees, foreclose fees/costs, plus the sales cost would eat most if not all of any equity potential in my opinion.No short sale here either based on what you wrote.

And I know one of the fha rules is that the home I purchase has to be owner-occupied/intended as my primary residence.Sooo, my question for any of you brilliant real estate gurus out there is essentially... can I have my cake and eat it too? 

Condo fees eat up a lot of your cash flow and while both of my condos are well run, I've had one before that wasn't.Some people like university rentals. 

I know some investors would rather not have all their eggs in one basket, but I diversify with LTRs in my home state.  

Make sure you budget in an increase in taxes every other year to make sure it doesn't eat into your profits significantly.

But drive to Austin a few times a year just to eat / drink at the Oasis.

Find some high yield CD's or savings to just offset the eat from inflation, it's not sexy, but beats traditional savings rates.