The cost for the electricity to run the furnace, it is an oil furnace, but electricity kicks it on, and to supply the hot water to my side of the duplex is $15 a month during the winter and about $5 a month when the heat doesn’t run.

I actually would consider that bordering on normal wear and tear and wouldn’t even charge a tenant for repairing it because I could fix it in a few minutes for a couple dollars worth of supplies. 

It is a simple calculation of supply and demand.

I'd recommend looking at a few 1-2 page contracts you can find at your local office supply store (yes, they have all kinds of legal contracts), and then talking to a good title company or closing attorney in your area (depending on the state, you will either close at title or with an attorney) and ask all kinds of questions about the contract you chose. 

The supply is tight still regardless of what anyone says due to net migration into the city.

The reply I got was they don't Supply 1099 to their owners and never have.

. :) Veterans are a small minority, the market finding it's supply-and-demand rent-to-price ratio equilibrium is finding that equilibrium at price points wherein the overwhelming majority are putting 20% or 25% down, so if you're putting 0% down and paying that same purchase price, you may have a hard time of the cashflow game (until/unless several years have passed, not necessarily just the minimum 12 months of personal owner occupancy).

With my local market down to .9 months supply for houses under 250k I'm considering buying out of state.What tips/suggestions do other investors have in this regard?

There is virtually no supply in the market and it would sell fast. 

We have ample cash reserves to protect us from the property though.Our current mortgage on the townhome is a VA loan and we owe approximately $188k at 3.1%, paying approx $1200/mo.