The best way to add equity in your first deal is through sweat equity where you can actually do some of the renovations and you are not paying full cost for the renovation project, but this is highly dependent on the condition of the property you identify.

  ( Hopefully you are with high integrity people, but there is always a bias because they get a pay day if you buy.) 

Example: If there are too many STRs and you can't get the occupancy high enough then you could switch into MTR. 

I have about $250k in equity in the home and my realtor believes if we list it we will probably get a bidding war in this market and since our neighborhood is highly desirable.

I'm at GBF, high table on your right as you walk in .

Jimmy,The key thing to note here is that they have high limits on their Insurance for Liability.  

This is not legal advice please consult with you attorney).Consider a step-by-step process increasing the pressure on the tenant with each step while accumulating documentation (which will be needed in Eviction Court):As per the prior comment, first contact the State Agency sponsoring/funding the Section 8 payments and document for them all the issues to see if a resolution can be reached.

Great strategy that should be highly considered in my humble opinion. 

Two high level quotes come to mind "Let your winners ride" and "a great value asset at a fair price is much better than a fair value asset at a great price".

Whatever the type of financing might be, they usually have maximums not allowing deductibles that high.