For an investment, I would say to stay clear.

Or did you mean refi into owner occ conventional and minimize/eliminate MI and then stay there a little longer then move out?

Since the water bill is attached to the property, I think it would stay with the property regardless of who it is billed to (assuming you even can change that).

Some investors disregard these rules and buy and sell using market conditions.To be more specific as to your thread, Duplexes and even Triplexes don't generally genereate enough cash flow and I'd stay away from them.

I am not looking to become a flipper to say, just looking to learn more about it so i can better judge the properties i see needing a lot of work on the market that i typically stay away on making offers on. 

SFRs have a few advantages though.... more family friendly, tenants tend to stay longer (at least in my experience), and better exit strategy (easier to sell, generally).

I had a lender tell me that, as long as we stayed in each residence for at least 12 months, we could keep going forward until we had 20 houses.  

The biggest con to buying properties this way is that you usually do not get to go into the property before you buy so you could have some nasty surprises when you do get in so your rehab budget has to have a lot of wiggle room. 

Factoring in the mortgage, I came out at $90.68 (526.27 Net Operating Income - $435.59 mortgage) as my monthly cash flow.So here are my questions:Am I correct in thinking that I can finance $100,000 to cover my cash in, and use the difference between the appraised value and the financed amount ($41,000) as the minimum 20% equity to stay in the property that is needed by the bank? 

That could be a great way to find and stay engaged with local investors, realtors and opportunities. http://www.biggerpockets.com/alertsLooks like you've already made some connections with BP members there in your neighborhood...You can also search for other investors or brokers in in Tacoma / Olympia / JBLM, and follow their journey on Bigger Pockets here: https://www.biggerpockets.com/search/usersBest of luck to you and look forward to following your success on BP!