I am going to come at this in a different light.

Just different colors etc....He initially listed his for $505,000.There are comps in the area that justify the 495-500K.

I totally agree, big investors can go nationwide, but knowing the ins and outs of your local market makes all the difference.

With a Conventional Loan you can buy a SFH, Duplex, Triplex or Quadplex with as little as 5% Down if it is your primary residence as long as you have the intention of occupying one of the units for 1 year after closing escrow.This is the strategy I have personally implemented and have assisted many of my investor clients in doing the same. 20% Down is also beneficial as it keeps your payment low but it does limit your ability of buying more real estate faster.i would be more than happy to discuss the different strategies with you over the phone or in person.

Advice will be different on each path.2.

It's interesting, but every state has dozens (if not 100s) of "submarkets" that can tell a different micro story.

Although whichever option you go with make sure you're also thinking about the long-term property value and what makes the most sense vs trying different angles now that negatively impact future resale/property values down the line. 

Does this structure make sense for investors, or would you recommend different terms to make it more appealing?

I wasted too much time trying to piece it all together and when you're in different states it's all the more challenging to make sure everything is legit.

You've got to remember the home has already been through numerous inspections prior to delivery, so the time it takes to finish is minimal.