Help: Refinancing a New Property w/ Low Value Hi- Cash Flow

[Tre James]

Good Morning Bigger Pockets Community, 

Last week I put a C-class property under contract in St. Louis, MO. This will be used for Section 8. The duplex is vacant and in rent-ready condition minus a few HVAC, sewer, and electrical repairs to fix what's on the inspection reports. Also has a full basement that could easily be converted into a 3rd unit. 

The home listed for 45k, we offered and they accepted $22.5k, and we expect to get about $700-800 total per unit. The owners are bringing cash to the closing table, they want out. 

I have spoken with a couple of lenders about a cash-out REFI based on the home value- we believe the home is valued b/w $60-70k based on what it sold for under an FHA just 3 years ago and what it listed for a year before that. However, some say they won't do anything below $50,000.00 and b/c we're only paying $22,500 they are saying the value of the home doesn't matter- what we paid does. (doesn't make sense to me).

What options and advice might you have for us cashing out after purchase. Ideally, right after we get tenants in it. If for some reason we can't, its still a good deal- but we would prefer to. We'll be leveraged, but if Section 8 only paid for one tenant and that tenant didn't pay rent- we'll still be cash flowing after mortgage is paid.