With smaller unit buildings your costs may seem more controlled with lower amounts of cash needed.

Business income is taxed higher, but his income is not business and won't be taxed higher than ordinary rates.The only things that are taxed lower then ordinary income are long-term capital gains and C-corporation income.

We were expecting much lower, Any recommendations

My assumption (which could be what is causing my confusion) is that a homebuyer who is seeking a lower monthly payment for two years is doing so due to financial constraints and needs time to adjust to a mortgage payment and the expenses that come with owning a home. 

I find that although the nightly rate is lower for long-term rentals, the money is still good because guests are willing to pay a premium for the convenience of a furnished place in a nice area.

Most do not realize that you will be cooling less square footage and will have less to clean AND a lower tax bill with a smaller house.

The pull for conventional loans independently comes from us getting lower interest rates and 30 year amortizations (higher cash flows) but we dont know if it will get sticky during tax season being that we arnt all on the mortgage together.

Easier to get in, bigger cash flow numbers, lower taxes, but there is less expectation for appreciation and Newark is more of a B-C area than PA which is an A area in my opinion.

All 3 tenants are paying lower than average esp the 1bd.

very very very common approach.. but agents are not going to get a seller to lower price just because they are double ending.. what usually happens is if there are multiple offers agents being human.. will slant their double ended deal .it does not equate to you getting the agent to sell the property for 25% less than what it could sell for on the open market.. agent would get in big trouble.