However, we both have debt.

I would look at how much excess cash flow is present and figure out how to apply all of that cash flow to pay down the debt on the properties to eventually refinance the upside down loans away.  

The current tenants have expressed interest in purchasing the home, however they claim they will not be able to get a bank loan due to outstanding debt- but that they do have a downpayment.

You should also consider having enough to satisfy all of your mortgages, debt obligations, and future college expenses for your children.Keep in mind that insurance companies sell term insurance because they are pretty confident you will outlive the term.

Although I know my way around restoring homes I am new to Real Estate investing and look forward to any help and input.

In 2009, after the collapse in the housing market and after the banks cut off further funding and called in loans, you were able to buy 1st mortgage debt for .10 cents on the dollar. 2nd mortgage liens were available at 1-2 pennies on the dollar.

You make a good purchase, increase the NOI, pay down some debt, double your equity and move on (via a 1031 if you're smart).

I was wondering if there is a way to use the potential income from one side of the duplex towards debt to income ratio?

I can't ask the bank for another loan, not based on my "Debt-to-income" ratio, or at least I don't think I can.

Apart from finding high cap rates and being okay with being in debt up to your eyeballs, are there any other methods of growing quickly?