It’s clear that the evolving market, especially post-GFC have shaped your perspective, and you’ve outlined some valuable points about the flexibility and challenges of private lending.The flexibility in ARV and LTV is such a huge advantage, especially for investors who might not have traditional financing options.

If you have any additional advice please let me know!

Also there is an additional tax on the returns due to the financing. 

They countered and we met them in the middle at 15% under, and then negotiated an additional $15k off during inspection, so total discount was around $150k off list price/ what they paid in 2022.

Section 8 would tend to carry higher repair and as a result, additional vacancy.OP’s definition of cash flow is rent minus piti.  

If they’re underfunded, you could get hit with special assessments.Not sure about the exact contract with the tenants, but I assume if there is any additional assessment, it would be tenants’ responsibility.Since you want to stay local and focus on cash flow, commercial makes sense, but have you considered industrial or flex space? 

You divide that $20k by .075 and you get a boost of $260k to the valuation.Allowing you to take the property back to the bank, get a new loan with $208k of additional debt on the property, pay yourself back that investment and now you have enough cash to buy a $1M deal and use that strategy over and over while scaling exponentially.

In addition, if this was originally an owner occupied house, there are often homestead exemptions where the first  $XX,XXX. of the value of the home aren't taxed.  

@Edgar Duarte Selling now under the primary residence exclusion avoids capital gains taxes, allowing you to reinvest the $500K equity in diversified assets like index funds or additional rental properties.

Tribes might even provide additional incentives, like grants or infrastructure funding, to encourage investment.