@Melanie P.1) The caseworker is supposed to approve all HAP contract amounts, but otherwise, who is realistically going to take the time to investigate and how are they going to prove it?

And does Congress approve this spending?

It could be a nice opportunity however I would be certain they will want you to make up the difference between $250,000 and whatever is left on the mortgage which btw in my opinion should be done with lender's knowledge and approval. 

We are running into a roadblock of him getting approved for a loan.

My duplex - built 1989, 2,060 sf, 2 bed/bath, 1 year old roof, value if I subdivide (county already approved) and sell each separately $150k each ($300k total)Investor duplex - built 1995, 2,300 sf, 2 bed/bath, 5 year old roof, value around $310kThe investors initial request was for an equal trade and they would pay realtor fees, which I replied wouldn't be equal due to buying/selling costs (recording fees, title insurance, closing fee, survey, inspections, loan fees, 1031 fees, accountant fees, repairs), taxes would increase due to new sale price, I'd trade a 3.75% mortgage for a higher one, and I'm on the 10th year of a 30 year loan so resetting that to a new loan would restart amortization and pay more towards interest.

Once the application is approved, we use Buildium to create a lease and email it to the tenant for electronic signing.

So accepting and approving multiple applicants is the norm?

You may get EXTREMELY lucky and find one for 15% (if they get approval from management), but you will not find one for 5%. 

I wanted to start tracking my daily hours in the business and wanted to understand HOW I need to do this so it gets approved come tax time. 

I have had a couple of clients just get the loan approved with the long term rates and then the bank really doesn't care how they get it rented out after.