Yes they will use all units assuming you're not occupying at all.To understand where the SS rule comes from, it is used to reduce FHA's risk in insuring these 3-4 unit mortgages.

Reduce your rent, eat at home and brown bag lunch.

I am really attracted to the reduced schedule time and reduced waste with modular construction.

How did you handle it?

If they are not up to market standards you may be able to use that to justify reducing the offer price. 

I know typically a duplex is more expensive then single family homes.My question is, is it easier to get conventional financing for that types of properties because of it's potential to produce cash flow,or at last reduce what I'm paying for the expenses out of my own pocket.?

I’ve done my research and honestly feel I can handle the process on my own. 

What is the best way to handle this situation?

@Keith MeyerPersonally I go for whatever is easier to handle and contact.

Good way to start out in property renting if you are not too far away to handle the property.