I have had a positive experience so far and I am looking to continue down this path and grow my portfolio this year by having my second deal be a owner-occupied 2-4 unit home. 

I'm fairly positive any time spent handling any aspect of your business goes towards the 750 hours.

If I compare the rental income to the PITI payment it's actually just positive, but with other expenses (water/sewer/trash and capex, calculated by using 8% of rents), it turns into ~$500 month coming out of my pocket.

The potential rent on th eproperty is too low to generate positive cash flow.

You are in a really good position with that amount of cash. 

I just started to cash flow positive last year after all my mortgages were paid off, but I have made multiple millions in appreciation.

You could refinance out of the 203k and take cash out assuming the equity position is there at the end.  

I am earning a decent W2 salary and generating some rental income from the 2 fully paid townhome properties. 

They make a little over 3x rent, have a small dog, and had positive reviews from prior landlords.

I am not eligible for a conventional loan as I am working for a start-up company and will not be approved for a mortgage.My thinking is to seek owner financing,negotiate mortgage directly with owner, and put up to 50k down for first property.Am I going in the right direction seeking financing directly with owner or do I have any other options in my current position?