I negotiate with these guys because most are flexible depending on your experience level and liquidity. 

@Carlos Ptriawan I am not sure what you mean.Last deal I bought as a GP was a 1,000 unit deal and I know I am not a "worst possible operator".

People who are just thinking in terms of cash flow are missing a huge benefit.Say I have an 8 unit with rents at $700.

Can you share any high level details about the nature of the trickiness so we can also help others learn on this thread?

If you rent, start with buying a small MF and rent out the other units. 

In Oregon the buyers deposit is generally fully refundable during the standard 10 business day contingency period (unless waived) and the difference in deposit could be interpreted as the level of commitment the buyer has towards the transaction, within reason.

What made us stop is when we had a Section 8 resident that did some damage in their unit. 

It wouldn't change your loan amount because lenders are conservative.You could explore 2-4 unit properties because lenders will count 75% of the actual or potential rents (whichever is lower).

But, could I minimize risk of renter defaulting on payments for the 2nd property by turning this property into a section 8 housing unit with guaranteed income from the gov't?

“You do not rise to the level of your goals.