The market here is obviously tough (and we'd like to invest here or nearby for several reasons), but we have heard about second home loans that have more favorable down payment and interest options which could increase our buying power and allow us to cast a wider net during our property search.Understably this type of product would have to pass the sniff test.

If its a primary home they can go higher but in a slow market 3% to 4% is common and if they are not coming in at full ask usually the seller offers 1-2% which is fair.The buyer must have an unexperienced Loan officer because you should always know what your customer needs prior to sending them a pre-approval letter or allowing them to go into contract.

At this point I would like to start putting my profits into rentals, single and multi-family homes, and possibly apartment buildings down the road when finances allow. 

FHA doesn't allow this.How is it possible that FHA didn't account for security deposits and prorated rents?

Having a broker underwite your loan to your borower will allow you to legally charge above the usury limit just as banks, credit card companies, etc. are allowed to do.Lastly, make damn sure the exit value is real and easily obtainable and that this "rehab estimate of $16k" is accurate.

@Samuel Metcalf- thanks   1) I would recomend getting a HELOC in place on your primary residence duplex  for  as much as  possible...this should be available for  free or a low  cost and the rate will be variable in the  8-11%  range ...prime rate +  margin of  1-3% ) ...the min payment is in interest only payment on outstanding balance   2)  use the heloc for the  remodeling  costs ...pay it down as  agressively as you can   3) on the  purchase of the investmenet  1 unit -  you are  allowed to put as little as 15%  of the price for your down payment ...the pricing you get for the loan will improve  as your down payment  grows so you might look at  75% /  80%  and  85%  ltv  options 

HOA now will be allowing max 3 rentals per year, which they say avoids the potential "grandfathering" issue.  

(CA, if that’s your state, does allow it under certain terms). 

I typically allow my tenants to rescind the 30-day notice as long as they are up with their payments and are not violating any rules. 

The first thing you'll want to do is define the zoning and what the allowed uses are for that property.