Typically here we would need to send a demand letter to close. 

No signing expensive leases that you personally guarantee typically. 

Alternatively, would this work as a typical STR?

@Aaron Dixon Welcome to the bay area.Lot's of options and differing areas all within an hour radius.House hacking would be a great way to enter the market here.I'd suggest deciding how far (long) you are willing to commute and narrow your buying / living range accordingly. 

Typically you won't have enough in business lines to do the whole deal, so you use them as gap funding along with a hard money lender to 100% fund your deal. 

Hey everyone, I am fortunate to be able to say that I have two potential options here.

I would like to know the best approach to let the tenant know about the repairs with the option to modify the lease for a smaller unit, I don't want to come across as a shady landlord, because I like the guaranteed check from section 8 and the tenant.

Yes there are a lot of HELOC options for rental properties.

In a rental sublease, you would sign a lease for an amount agreed upon like the typical market rent.

On top of that, I don't have a car, which limits my work options to roles that allow me to finish by 4 pm.