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. 

The second bath is nice, but on the lower end not common and not needed.

@Johnny Stacks Turnkey is a very common strategy, especially for newer investors.

A few months ago my dad and I decided to get ourselves educated about REI and coincidentally noticed that the current tenant is living in the house without a signed lease.

I often have a new tenant signing a lease within 48 hours.

Have I signed over the title after the downpayment or do I retain title until the note is fully paid? 

@Brian Garrett   Yea he'd have to if they're only staying weekly which could be a bad sign.   

It is a good sign that I would find a tenant relatively easier yet the average rent is not as high as I would ask for.

If somebody could explain some common terms in real estate or point me in the direction of where I could learn more about real estate terms I would greatly appreciate it!

I would just tell them at the end of the year lease we can re sign if the living situation is working out for everyone.