Although FHA loans need little down payment, there may be a higher interest rate.

The dollar you spend on ADU will be sufficient for the down payment of SFH in south or midwest.

How do you all structure the monthly payment if a tenant cancels the lease midway through the month? 

You could use the money towards a down payment on a new property.

Rental assistance/payments will begin the date the property passes the inspection.There are landlords that do not like the Section 8 program or want to be involved with it, either due to a bad tenant experience (which can happen in or out of the program) or simply from stereotype or ignorance of the program. 

Refinancing can allow you to pull out equity, providing you with additional funds to use for the down payment on a new property.Look into financing options for purchasing a duplex.

Rarely covered in the version that's turned over, but important edits will set expectations, payment schedules, and includes specs/allowances.

Check with your lender what your new payment would be on the existing and what that would allow you to afford on your next purchase.You can still do an owner-occupied loan up to 4 units but if you're using your FHA/VA loan you'll have to go conventional 5-10% down. 

But it does happen. the major risk is to the person you bought the home from. its their credit at risk.and of course if you put any down payment that would be at risk as well if things got bad.when you go into these deals you need to know if the bank does call the note that you can refinance and pay it all off or you have the cash to retire the loan.. anything short of that and your at risk .

On the other extreme, for a (median) $382,650 purchase, rented at $1,400 /month rent, a mortgage at 0% down, 5% interest fixed for 30 years, the interest payment alone starts at $1,594 / month.