Long story short, gives you a lot of options and depending on a value add play and negotiations, it won't take as much money up front that could be used for renovations.

He doesn't have any signifcant savings (~10k), and his only income is social security and a small pension which comes out to a total of ~3k a month.  

A DBA would be a cheaper option.

See what your options are and make a decision with legal assistance.

In my opinion, the second option is a better approach.

Looking at the rough numbers and we are comparing apples to apples ie: area and appreciation, I think the first is a better option because the cash on cash return from the investment cost to rent ratio.

We jump between 3-5 as pricing fluctuates.4 - Commercial Grade furniture - Wayfair (and many more) offer commercial grade options. 

lease option type of set up to with the down payment as a non refundable option payment.sounds like a big enough project the buyer is probably substantial and real.. 

Assuming less competition, I believe I could secure the property at a lower price by participating in the second mortgage auction.

But better yet, do a deep search on this very Forum and see what actual S8 Landlords have said about this.Rental Pricing RegulationsRisk of Renting in Lower Income AreasRestrictions of Section 8 TenantsDon’t Receive Voucher Payment Until Tenant Moves InHUD Does Not Pay Security DepositsAnnual Property InspectionsPotential for Difficult TenantsProperty Damage IssuesHarder to Evict Difficult TenantsFull-Paying Tenants May Turn AwayDifficulty Selling Properties to Free Market