Paying off a mortgage reduces the cash flow on a rental due to the fact that the equity expense (opportunity money value) on the rental income should be a minimum 10% off the top.

All-cash offers provide benefits for the seller like a quick close and reduced stress/red tape.

I have tried every which way I can to reduce this cost, but it is almost impossible to do so and address all the items that could cost the investor maintenance.  

However, if the bank does think they some enforceability/documentation defect (unlikely) they might be willing to consider it.Thanks.Sounds like the banks like to keep family interests out of it to reduce liability just like hard money lenders (HML) don't like to loan in owner-occupy situations.  

The best advice I can give you is to live simple, reduce your expenses, and do not take on debt.  

I agree, a lot of people tend to sugar coat opportunity without giving the full picture. 

What makes it difficult on this property is that the seller challenged her assessment, and got it reduced to about half of the values in the neighborhood.  

If they don't have a pet, I can reduce the deposit requirement.  

I started with 7% arm on regular investment property purchases, did several purchases with them and built a relationship, then slowly expanded my line of credit and reduced my rate.

House hacking to me doesn't need to put money in your pocket, just reduce your overall housing expenses significantly.