Does he have to report the income he received this past year and declare it a rental event though he would like to move back in eventually?

Assuming I could qualify financially (primary income plus FHA allowed rental income contribution from additional leased units), when I become the owner of the property, would that prevent me from using a FHA 203b to house hack a second property? 

If you really feel you are going to miss out on income by charging them 20 days vs the full month you could try and split the difference and charge 25 days. 

Still a great market for owner occ/house hack, but again it's not a high income area so rental rate is going to top out a bit in my opinion. 

And quitting your job will probably not happen right away, the income from your job will help you to get loans to buy real estate.

House hack potential of adding two separate rental income sources while living in the main house.

I intend to hold onto the property long term and yes I would be willing to live there if there was no income potential.

The conversion from resi to comm + the added income could drive up the value dramatically.Your only real hurdles (in terms of proceeding with production) are zoning and permitting.

I am glad you mentioned to lending aspect of not having the W2 income.

I need to learn more about this but I think the depreciation would only offset rental income (passive income) right?