Can I claim the deduction of $80,000 * 0.60 = $42,000 against my w2 income in the first year? 

Essentially once the panels are paid, you are looking at another source of income due to the fact that you are now essentially the power company for your own house.

This will allow you to acquire more rental units and also being able to use the vacated unit rents at 75% to help your debt to income ratio DTI.There is a FHA 100 mile rule if you do plan on using FHA on your 2nd house hack.

@Michael Lipari I recommend renting it out for a period of time, taking some rental income, then selling off market and you may be able to convince the IRS that it was an investment property.

There are several ways to run and make sure you are maximizing your rental income while keeping your living expense as low as possible.

Just getting into the real estate investment market to generate cash flow for retirement and something that my kids can rely on later in life.  

How steady is your income? 

My goal is to build up a strong portfolio of long term rental properties that will generate cash flow which I intend to use for reinvestment in the short to medium term, and to enhance my retirement cash flow in the long term.

That will allow you to buy another home as a primary and reap the benefits of the increased passive income & deductions.

Yes, you can absolutely purchase a property with a conventional loan and honor the existing tenant lease.In fact, many lenders view occupied properties favorably because it means there's a guaranteed rental income stream from day one.