In addition, if the C/O is for 1,  and now will be 2, without the change and approval, the water and electric utility would not furnish you additional meters.

They want a full blown home rented for what utilities cost me.

@David MoreheadBooks: Due Diligence Handbook (super important and often missed element of the underwriting process)The Real Estate Game: The Intelligent Guide To Decisionmaking And Investment (solid overview by an experienced operator)How to Create Lifetime Cash Flow Through Multifamily Properties (free, solid book)Articles:How to Avoid the Most Common Commercial Due Diligence MistakesDeal Screening Checklist for Passive Multifamily InvestorSpend time poking around the Internet + networking with local multifamily investors to understand how to underwrite and what assumptions to use. 

Is it still possible to name him as the occupying borrower and utilize a 203K mortgage?

@Henry D West I do much the same thing Account Closed except that I use a lease option or agreement for sale (commonly called a land contract or contract for deed in the states) because they work better for me here in Ontario.

I will have to look into utilizing that for my area!

It was quite common to use Comps from one subdivision when evaluating another. 

You pay an HOA fee and it covers electricity, maintenance, utilities, etc.

It's not right, but for the money it's an easy paycheck for them, so I have to assume it's very common. 

There about 100 million posts about “what should I do with X amount of money” so I’d recommend utilizing the search function to find those and read them.