I made an offer on an REO as an owner occupant a little over a week ago and the realtor said that the bank went with a higher offer.

Of course, you can definitely prevent this (or minimize the risk as much as possible) by having appropriate screening in place.So it sort of sounds like there would be no incentive to an owner to replace section 8 tenants. 

I personally like targeting stale listings, reaching out to owners who have been marketing their properties for 120+ days but have not sold them yet.

Have the previous owners as the beneficiaries, so if the lender asks to see who the owner is, they can show them that, but I would have another contract assigning the beneficial interest to myself.

I wouldn't mind spending the time on rehab, and seeing as how I will be using a low down payment to owner occupy for a year I should have some reserve funds to do upgrades.

Some states have a recovery fund for licensed contractors but may not cover non-owner occupied or commercial entities.

We are looking into buying SFH's in Atlanta that have a basement, side 'apartment', and/or in-law suite as a creative way to generate rental income while owner occupying the property.

If you want to do it right (which you should do in this case), you'd have to put in a new common-area meter that both owners would be responsible for splitting. 

As a home owner in a HOA there is no way I would put up with others turning it into a hotel.This is not about rules it is about respect for others.

When I bought my business, the other owner had a CPA, intimately involved in his business, so I have to decide whether to have one CPA for everything, one CPA for each business, which will be more expensive.