I understand your point of view and will try to figure a plan to get some of my numbers down.  

Now let's look at it from the tenants point of view ... they are renting for $465/mo and can drastically reduce their expenses by buying even a much nicer place ... then why don't they do that?

I have completed a good bit of research via books from gurus which provide a 10,000 ft. view of the process but not necessarily a step by step. i.e. where do I find owners of MF to contact, if I find a motivated seller, what is the legal setup (syndication first, or LLC?)

If you're not inclined to make the drive, use Google Maps Street View to check out neighborhoods.

But I'm pretty sure a married couple is not allowed to each have a "primary residence" (at least for tax purposes), but I'm not sure how the FHA views this issue.So if only my name was on the mortgage, could that multi-unit be my primary residence as the FHA requires, while my other house would be my wife's primary residence?

Thank you all for the input, I appreciate it, I needed somebody to give a different view on my deal and dissect it in more detail.  

The rehab was a bigger job than I was looking for and I expect the price will be much higher than the asking price (listed at ~$300k for ~2200 sf (bigger if including the unpermitted work) with a view and 0.8 acre lot).  

Does she know that in NJ for foreclosures that trade at sheriff's sale auctions, these are the requirements:1. cash only-no finance, 20 pct down at time of the auction2. as-is transactions3. no inspections4. no viewings (unless it is also listed as a short sale at the time)5. you are responsible for holdover tenants and holdover homeowners6. auction docket is not fixed, most properties get continued between 4-8x before selling at auctionThese are just a few of the pitfalls with buying foreclosures to live in.

Make sure to view the Bigger Pockets book store: https://www.biggerpockets.com/store

So I found a short sale property contacted the agent and tried to make an appointment for a viewing but unfortunately was unable to get a date because the owners wouldn't answer the agents calls , so I took matters into my own hands and took a trip to the property and knocked on the door and found out that the owner is out of town and will be back in a few weeks, note that the wife was the one who told me this ....