Include text so that states what will happen if the new lease isn't signed by landlord and husband such as the return of keys by all parties date.

Determine the most likely sales price of the build (factor in the cost of the land also) and include all selling costs to arrive at your net profit and ROI. 

I have also utilized owner financing for longer periods of time, including personal residence and 2 barrier island houses on the coast of Florida.  

Other areas nearby that are great include, Cardiff, Encinitas and Del Mar. 

A couple of things happened in the last few months including a lump sum pay out for a retirement from a company for whom I previously worked and I inherited a modest sum unexpectedly. 

I've talked to lots of California and a few NYC investors that have lost money (including myself) who bought inexpensive properties in the Midwest mostly and a few in the South (Class C is volatile). - some strategies I've seen California investors use to lessen negative cash flow: house hacking, mid-term rentals (people temporarily displaced from home renovation or insurance reasons like fire), rent by the room, Short Term Rentals. - The ultimate house hack, live in the small ADU unit and rent out the two levels of the main house on AirBnb in San Francisco (I would have thought STRs are oversaturated in S.F. but it worked for them and they stay fully booked).

Once the tenant applies for the unit, you'll have to work with the tenant and Section 8 to get approval, which always includes an inspection of the unit.

The overall LTV (including all 3 mortgages) will be key and your selling point will need to be that the 2nd mortgage ($8k) will burn off in 2.5 years (based on your surprise that it was even out there, I'd recommend that you follow up in 2.5 years and ensure that it's been satisified, so that it doesn't surprise you again in the future).Does the $8k grant vest over the 5 years? 

Also, from what I read in Bloomberg, midterm rentals near major hospitals can sometime command a decent premium.. especially if they include some nice furnishings.Little Tweaks Count: Even minor upgrades, like new door locks or a fresh coat of paint, can help you justify a stronger rent.Driving for Dollars & Networking..

Sounds like a good plan, should have plenty of options available.I would be cognizant of any group you talk with on two areas, the location of the property including any potential concerns of it being 'rural', as well as the minimum purchase price and/or minimum loan amounts.