My partners and I run a residential assisted living focused fund.

We also are very verse on the Property Code Laws of what legally we must do and what is just good business.So @Ian McClure to answer your question, it would depend on how the new tenant was on boarded and what kind of business the owner runs concerning his property

Greg, that's a solid advice - run your numbers based on market price, not on Section 8.

I never run credit so I am curious to know from current lenders that deal with credit daily. 

After I would refinance and roll it into the next deal, like all BRRRR's work.Lets say I find a deal and the numbers run to be exactly like the situation above.

If you have a solid tenant lined up, like say Bigger Pockets HQ (yes, I put 2 and 2 together there, I'm sure you have too :), or some other business you  or someone you know personally runs, I think it's a no-brainer.

The concept of the Housing Authority running out of money never even occurred to me!

Quote from @Garrett Brown: Hey Kyle, you are taking the proper steps by switching in the long run.

IF you were to renovate a non-conforming unit, that unit would now need to be brought up to code.When or if you rent out the unit, you, of course, run the risk of the tenant calling the city and saying the property isn't up to code, which would, in turn, cause an inspection by the city and likely result in some violations that would require you to bring the unit up to code.These types of units are ALL OVER the city of Chicago and be rented out on a daily basis, but there is still clear risk associated with renting them out.

In my case it's closer to the end of the 1yr lease term which runs until April.