Just trying to create a loophole or use an existing one.Any insight into this idea or suggesting on alternative route...

This implies that this zero risk, high return you seek likely does not exist in RE

Here are a few strategies to consider moving forward:1.Consider Existing Properties:Since new construction timelines are extended, you might explore purchasing an existing property that you can renovate to include a Next Gen suite.

The opportunity for outsized profits versus LTR always exists, because it requires much more work in terms of marketing, maintenence, cleaning.

My existing portfolio definitely hews toward working poor, but in areas where the locals tend to keep their yards up and have at least a bit of self-respect.

What only exists is the "right" month for YOU. 

Something to keep in mind as well would be if there are any prepayment penalties on the existing loan that you've got as that would cut even further into the funds you'd be looking to take out.

And that's per seller(s) directive so again, your argument is non-existent, it's seller(s) directive. 

Lots of moving parts...and it's wonderful to be able to start with a blank canvas and design exactly what you want to build (as opposed to retrofitting based on the restrictions of an existing older structure).  

@Yashar Fred I have had several Section 8 tenants in my San Antonio rentals (SAHA, HABC) and my experience is that while bad tenants exist, being Section 8 does not make them inherently bad.