Paying off a loan is usually not the majority of the payments to own a home, so why do it?

Yes, one of the features we offer is online rent payments.  

It has also been suggested that I use HUD financing since I would only need 3.5% down payment and the seller could assist with closing costs.What are some possible options that I have to make this duplex deal happen with limited cash reserves?

You will need to get 5k-20k to put down for down payment/closing costs.  

I am risk averse so I hold at least 6 months worth of mortgage payment as reserve - if a tenant leaves for whatever reasons, at least I'm covered to a certain degree.

Personally I would invest in a fund with an 8%+ preferred return with equity split that pushes the realized return to double digits before I would pay off that debt.

.- Hard money will do the loan but with rates at above 8% with sizeable origination fees and significant pre-payment penalties.I was hoping some of you seasoned folks could help me figure out some creative financing solutions for this little conundrum. :)

I plan to keep working to save 20% of down payment to buy an other home rent it, with that cash flow do it over and over again.

When the tenant moves out you will have a minimum of 1 month if not two months where you receive no rental income, you have to pay the mortgage payments and then you get to spend more money on make ready repairs, if the security deposit was low you will have more out of pocket so the income earned over the last 12 months has disappeared and then some.

What is your current gross income less expenses, not including your payment to the seller?