Have your new rules in hand upon meeting (as long as they don't contradict with the lease).

They are fairly common once you have built up enough equity.One tax issue that you may want to be aware of (if the commercial property is in an entity like an LLC) is the debt-financed distribution rules. 

Right now the city of St Louis is in support of it but in the county the rules vary with each municipality.

There are plenty of rules and regs for the 1031, but no limit on how many of these tax-free exchanges you can do during your lifetime, so this process of having tenants pay off a property, exchanging into something else with a 1031 and expanding your portfolio can go on until he has the income he wants.

Whats a general rule of thumb when it comes to buying properties bit further out from where you live? 

Just like a reverse exchange but instead of the QI purchasing the new property and holding it until your construction was complete we lease your property from you on a 30 + year lease and improve the property and 1031 by purchasing the leasehold from us.There was a private letter ruling that indicated this was ok a few years ago but recently some new clarifications seem to put it in jeopardy.  

But as first time home buyer, you could get into FHA loan for 5% down - so it means all you need is 20-30k for a 400 to 600k transaction (which you can borrow for 401k) but you still need to improve your income to qualify for the repayment.

As the economy and consumer confidence continues to improve, rates will increase. 

My question is this, if I am applying for a FHA loan, is there any FHA or HUD rule that states that I cannot move into the property and rent it until it finally closes.

With this system I am able to setup rules that will shut off AC if doors or windows are left open for an extended period of time.