However, tenant insurance is typically intended to cover personal property and liability for the tenant, not the building itself.

Keep in mind that while there is an exemption to the Fair Housing Act.....most states that have a state level Fair housing law do not typically provide the same exemptions as the national law.

We get a condo rental in Oceanside typically, and stay for 2 weeks. 

Typically, a rating of A- or better is a very strong company.

If you'll be stuck in limbo unable to make another investment for a long time because the $107k is stuck in this deal then sell the property.   

@Thomas FarrellRecommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.Property Class will typically dictate the Class of tenant you get, which greatly IMPACTS rental income stability and property maintenance/damage by tenants.If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.If you buy/renovate a property in Class D area to Class A standards, what quality of tenant will you get?

If you are unable or unwilling to do so we may elect to terminate the lease and request a return of our deposit--which we offered in a good faith agreement that we would be presented with a habitable dwelling--and our prorated rent.

My agent is saying that we are unable to split the contract that way (or reduce the purchase price), so I'm trying to figure out options.

Thanks  Section 8 is typically going to be on the higher end of market rents for any given area.

If additional funds are required or if a professional is unable to resolve the issue, Lula will reach out to you directly.Let me know if you have any questions!