If I kept it as a single family, 8 bedrooms is a lot to rent it out to a regular tenant so I was thinking about doing a pad split instead. 

lol. asset cap rate should be higher than mortgage rate to begin with.this is the same as buy-hold , if i can invest to debt that generates 8% income why buying equity investment that appreciate less than 5%.

5) Remember to hold 10% of the payment for final inspection.

@Jacob Lopez, as others noted, house hacking is not really a cash flow play, in a traditional sense, since you are effectively removing 33-50% of the property from the rent roll.If you plan on living in a unit for a couple years, then holding longer as an investment, I would underwrite it as an investment.  

Most experienced people doing subto are also not going to be in these deals for very long, they will only hold them for a short time period because the risk increases the longer you hold the property.

The market is still way overpriced and I would dread of seeing what many of these homes will go for one year from now if i was holding hard money or a HELOC once the market does reset.

Investment Info:Single-family residence buy & hold investment.

If your plan is to hold the property for a long time, go with either a 30 year fixed. 

The idea of having a cash flowing portfolio large enough to reduce or even fully step away from my regular work is obviously very attractive, but as a total beginner I don't want to set my sights too high without first gaining some experience in REI.

Not that it really matters I guess, except if you are trying to buy at auction...where you'll need cash.Yes you can get a regular loan to buy a house that is in the foreclosure processYes you can get a regular loan to buy a house that is an REOYour friend and the "Construction Loan" is assuming the property is a wreck...