A 4 bedroom would have you competing with larger condos or townhouses with pools, a much lower rate of return. 

Their lease is 6 month term with a same rate month to month however, their insurance states the rebuild of their home and fire investigation efforts are going to take 12-18 months. 

I got a new insurance policy at a higher rate.

They have definitely become more challenging since rates have gone up.

Yes that’s why I want to hold onto it is obviously because of the rate. 

This increased demand is in areas that all ready have limited supply.Since the rates started to rise, my appreciation forecast has been conservative (as I have indicated in numerous posts) for my San Diego market (I have been underwriting at zero appreciation near term) and fortunately for me the market out performed my forecast.  

You can test this, by asking some to SHOW you how they calculate ROI, Cap Rates, Cash-on-Cash, etc., for their clients.Many will say, "that's the investor's problem".They are correct because an investor should NOT rely anyone else to run their numbers.So, then what exactly makes them investor-friendly?

Based on what you've told us, your rate should be at prime (7.5%), unless you are over 80% LTV, then it would be prime +1.Jeff

In my experience, the average Section 8 resident behaves differently than the average market rate resident, and the government-backed rent is not worth the added hassle.  

Personally I would want to manage the rental myself at least in the beginning to make sure you get good ratings.