Hey Melissa,I shared your question with a marketing consultant I work with.

There's a few other things to think about too: 1 - Possible owner financing if he wants to still get a stream of income into retirement at an attractive rate compared to the rest of the market (win/win scenario, you don't need to come up with as much cash, and he makes a little $ on the %) 2 - Consider a post possession if he needs some time to move out but needs the cash up front for whatever reason 3 - Leave all the furniture/junk in the property and you'll handle clean up etc. 

My area (Anacortes Wa) doesn’t seem like a good market for multi family.

It can be challenging to find ways to house hack in a market like this one for sure.

From asking around the community, it is difficult to find cash flow under the current market conditions.

- best markets to buy?

The rule states that 75% of market rents for all units must be more than the total mortgage payment.

Marketed the property for $179,000 and went under contract and closed for $186,000.

And it works in any real estate market depending on your needs.  

I am leaning towards demolishing the house and building a simple 3/2 but I have no market data in the city for new builds in recent years.