If so, go over your comps again and your repair estimates and get comfortable with it. 

One with a high of an $8k estimate and the othernwith a low of $12k are virtually the same to me. 

Depending on the deal, you may end up being able to live there for free, giving you a lot more chance to save.

They refused and are working on getting everything finalized on their estimates for damage and hotel stays away from the home. 

Because cleaner or less rehab properties would be less riskier in terms of rehab estimation.

Unrealistic estimates and expectations

The townhome (according to redfin) is currently estimated at $1,009,000.We have been debating renting out the townhouse since it is relatively cheap.

The estimated ARV is 174,000 per comps in the area.

Not having experience with Section 8 I cannot say with certainty that you would not pass muster with this property, however if the housing authority does do their due diligence on a property I suspect that any shortcomings will quickly become apparent and would likely sink your chances of qualifying that property for Section 8.

It may just be that I'm going to have to look for deals another way, but it's got me worried I'm doing something wrong in my initial estimates.Here's how I'm calculating my estimates, using a current duplex on the market as an example.