Is it smart to just sell, pull equity to put towards the new house or use the potential rent to put towards the new home payments once the rental overhead is taken care of?

Be careful to avoid analysis paralysis.

Yesterday I found out that my old neighbor who moved away to take care of her father, inherited the house next door upon his death. 

Other lenders as a new relationship may not care as much because they were not the ones that originally funded your loan and would not yet deem you as a risk.

I would be a little careful with Section 8 unless you have experience with it. 

To avoid going through the same poor experience, keep reading.Even if someone gives you a referral here, do NOT make the mistake of assuming that the PMC will meet your expectations, just because they met the expectations of the referral source.In our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.It's often a case of not doing enough research, as they don't know what they don't know!

And then use a direct mail service like Yellowletter HQ and select the smaller envelope.  

When you can access the opportunities first, you get to analyse and find the best deals first which means you have the broadest selection with minimum/to no  pushback from the lead.Unfortunately using PS guarantees you will not be at the front of the queue and certainly not first mover.

Check your insurance, I’ve seen a lot of people specialize in renting to group homes or care facilities so there must be a commercial policy for this.

Seller doesn't care how we split the real estate vs. the franchise, but I don't think I could get $250,000 for the real estate.