You could grow this into a business and automate to make it more passive eventually with employees doing the work.

If you go up to market value (assuming your area permits increases that large), the tenant may move. 

Bottom line: The question is not only whether Section 8 house hacking is permitted, it is whether the tenant profile and program requirements fit your goals, budget, and tolerance. 

There’s no legal workaround for that without risking fines or permit revocation.

I have seen Predatory Lending where the term is shorter that the work to be done with permits and financing factored in, which allows for lofty loan extensions.

Tenant may permit guests to stay with Tenant in the Premises for up to ten (10) days.

. • A quick hack: pull the last 5–10 permits issued in that area.

Most municipalities have licensing and permitting that's required to operate investment real estate, whether it be income producing or for-sale and it's not difficult to obtain the documentation bearing the owner's name.

Permits....get them....I see properties red tagged all the time. 

And of course, all septic systems in TX need to be permitted.