Owner-occupancy shall not be required if the owner is another governmental agency, land trust, or housing organization.Link to the code - https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?

Unknown contact detail of prior owner.

You live in one of the biggest REI areas of the country, so smart to take advantage, especially now that they opened up 3 and 4 unit multis to owner occupant low downpayment options.I looked at a great 4 -plex available in Gladstone for $365, will probably go for $385.great deal. good condition. $800 per 2 bed /1 bath unit. quick mortgage calculator puts zero% down monthly payment at $3500, plus then offset with $2400 puts you on the hook for $1100. 

well reality is the 200k has better schools  better tenant base to chose from and since your at the median or above not all the homes are being sold landlords the majority is going to owner occupied.. there by making nicer neighborhoods nicer streets and place were those premium tenants will want to live. 

I found this house thru my connections and relationships in the neighborhood and purchased it directly from the owner.

If you want to protect your friend's capital as if it were your own, you'd want to:1) Secure the loan with real estate in the form of a deed of trust or mortgage (depending on the state the property is in)2) Obtain property insurance binder with your lender as an additional insured3) Obtain a lender's title insurance policy protecting them (different than an owner's policy) and transfer all funds through an escrow closer or real estate attorney (depending on the state, the requirements for closing may differ)4) Use a real estate attorney who also practices private lender law in the state the property is located in.

I found this house thru my connections and relationships in the neighborhood and purchased it directly from the owner.

With the lower down payments, you also have mortgage insurance which is added to your payments, but it adds up (often to more than the 15% down payment you saved by putting 5% down for owner occupied homes).

I have hinted around to the owner that I wanted to buy it for over a year and he has had no interest to sale.

Are you looking to owner occupy the home or have it be a rental property?