I don't see them showing up or paying any of the back rent that's due to become current if they wanted to stay.

@Jon D. some questions, the answers may help you better focus.1) Why did you pay your primary mortgage off in the first place?

But, the self-sufficiency test for FHA loans can be really difficult in SF, meaning that the market rent from units you will not occupy must be sufficient to pay for the mortgage payment. 

The reverse mortgage company wants buyout and I dont have over 200k to pay out.

Remember, in this model, you are planning on holding on to these properties as rentals so pay now in quality, or pay later in headaches and repair costs.

After all, you have no evidence they agreed to pay rent or any of the other terms.

Don't let them choose for you.Just inspect what you expect....Also I would talk to housing office in Memphis to get a feel of how many people are on the Section 8 waitlist, what kind of rents they pay, what zip codes are they targeting, see if they have any stats about how long tenants stay and average rent.While a lot of people try to look at google street view to get an idea of the neighborhood, there is no substitute for visiting in person.

If you have the stomach for it and understand the big picture it pays off. 

You’d need to check the local laws to see what counts.Tenant Violations: If they’re breaking lease terms—like not paying rent or subletting—you might have grounds to evict.

And I would love some passive income or at least someone to pay my mortgage until we can pay it off maybe.