One of the most common reasons is the lower cost of living.

Aren’t DST’s essentially syndication deals, but with much lower returns (though they do accommodate 1031 exchanges)?  

(I know, nothing is certain but just hypothetically) and all cash out loans are not created equal. if you have a lot of equity you can borrow up to 60% with the lowest rate possible, which would be close to a half point lower then borrowing up to 75% loan to value. 

From my understanding, it might be more advantageous to refinance as a rental property at a lower LTV with income from two units, rather than as owner-occupied at a higher LTV with only one rental income considered.

I thought there was a chance that one could use real estate to directly lower their main source of taxable income (such as a w2).

Not to mention staff, I’d check on the number required to stay up to ratio throughout the day, night ratio is likely lower than day ratio.

When you say "section 8" tenants, are you looking at low-income housing tax credit type properties, or standard rentals that are in lower income areas and therefore cater to HCV tenants?  

They lower taxable income for federal taxes but not for FICA.However, employer contributions made by the S-Corp are not subject to FICA and count as a business expense.Make sure your W-2 correctly reports wages, deferrals, and FICA wages.

You could potentially negotiate this by structuring it in a way that aligns with the seller's need for a quick settlement, without lowering the cash they’d receive.

The only other option would be to get a coborrower to bring the down payment or get seller financing with a lower down payment.