It's hard to find an affordable duplex, townhome or condo that appreciates and someday you WILL want to sell.)In my experience it's best to buy your own home first, live in it awhile as short as 6 months, ( buying it owner occupied for the lowest down payment and best 30year interest rate: do an adjustable ARM, 5 year if you can get it.)

The scenarios I see are what I consider to be not arms-length transactions.

Do I need an arm's length transaction(Section 482)  and if so, how do I do that?

They aren't super pretty (ARMs with rates well north of 4%... still way lower than HML), and obviously your plan can/should be to refinance into fannie/freddie money the second you're in a position to check the necessary boxes. 

-Marcus :)Quick Edit: Real Estate agent will be contacting me in the morning so I would like to be armed with some questions to ask to get a better understanding of the property.

The best I'm being offered is in house 5 year ARM, 20yr amortization.  

My FCU was letting me buy the properties 10% down, 5/5 ARM, No PMI, 3.75% APR.

I would enter the house heavily armed and tell them that they had a choice.

As of January 1, 2013, it explicitly added debt buyers to be included under the act.If this is true, is there anyway around it?

A 15 year fixed or a 5 year arm, amortized over 25 years.