While it might be tempting to develop your own Multi-family, the costs and risks are higher.

Only one current tenant is a poor housekeeper and that has nothing to do with their low income/Section 8 status.The key is, when you provide affordable housing (or any type of housing for that matter) you need to reduce your risk.

Many organizations (property management companies, large investors) have a large (and mostly un-quantified) risk that they should be addressing.

However, what you're describing sounds like a situation where you might be in that other 5%. ( I've had the luck of buying in gentrifying areas, and have profited from it- that's really how I got to the point of being able to invest in cashflowing properties) It doesn't sound like this is too much of a risk (assuming you are fully accounting for all expenses in your numbers, not just rent minus PITI), or would require too much time and or money to get into.

Your business has no history of income for a lender to go off of making you a high risk borrower.

Again, you still have to have both transactions lined up and there is much more risk the longer you have to wait but trans funding can sometimes be used for those.

I'd really be curious as to how other investors would perceive a house with that level flood risk.

With a property in that price point, I would probably proceed now with the listing agent rather than backtrack to find your own agent and risk being too late to the game.

There's a great deal of risk in this type of transaction.

In some areas section 8 pays above market rents versus a regular tenant but the risk is HUD sometimes also adjusts that rent downward.