The other option would be to reduce your criteria to either a SFH, duplex, or triplex depending on the price, and still take advantage of the FHA loan.

@John Kunick seems like he’ll be reducing his prospective renter pool quite a bit.

It also requires you to reduce the interest rate by at least .5%. 

Since any renovations are unlikely to add value to the property, based on this discussion and thinking it through, I'm going to calculate ROI based on a 15 year holding period, looking at what reduces maintenance, risk, and helps keep rents at the level I want.  

To refi an investment in Texas is fairly straight forward if you are doing a rate and term to reduce the payment amount. 

UPDATE 9.21.21    So Duke energy owns the pole and I had them send out a technician yesterday who called me yesterday evening from the site.

It is livable but quite dated and we would want to modernize/ make more energy efficient and maybe even add a small in law unit if he would like to stay in the home as well.

But if the borrower pays off the $120 (likely less since payments being made for a few years reduce the UPB), it's still greater than the initial $60k so do you consider that like a sale and just caulk it up to capital gain?

I just interviewed with a few brokers, and am leaning towards Keller Williams in Elk Grove given the high energy and training opportunities.

Explain that to make improvements to the property requires a little increase and take into consideration their income, time in residence, and try to make improvements that can reduce the overhead.