I was willing to pay more than my competition.

I emphasized the quick closing timeline and my ability to pay cash via hard money financing to strengthen my offer.

Meanwhile, bank money market paying 7.5%. 

Personally, If I could pull out a HELOC, I would use it to fix and flip which will typically make sense as you shouldnt be keeping the money out for that long and you can recycle it or pay it back and build off the capital that you got from. the flip.

That being said, your typical cost of capital is as follows:EquityAgency debtBalance Sheet local lenderDebt FundPrivate DebtPref EquityHard Money DebtBookie/Loan SharkOther things that will impact capital sources: are you wanting to finance the improvements, or will you pay for those from equity/cash flow?  

You have to put more money down and pay a higher interest rate and is limited to only 2% IPC.

Doing this will indefinitely defer paying tax on profit or depreciation recapture. 

Yes, the government pays the Section 8 rent timely, but more and more tenants are having to pay a portion of their rent.

Use all of the proceeds and take a smaller loan initially. 

The tenant fails to pay their last month's rent and leaves the place needing new flooring and paint.