Seller Finance vs. Section 8 – Need Advice on Deal Structure

Hey BP community,

I’ve been digging into seller finance opportunities, but I keep running into the same issue:

Most of the deals I’m finding are structured as a Contract for Deed (CFD) / Agreement for Deed. The catch is that housing authorities (HUD/Section 8) do not accept a CFD as proof of ownership, which means you can’t rent the property to Section 8 tenants until the contract is fully paid off and the deed transfers.

My strategy is to:

• Rent the property to Section 8 tenants right away (much higher rents, around $1,400 vs. $800 market).

• Use the stabilized income to refinance with a DSCR loan in 3–6 months.

• Without Section 8 rent, the property won't appraise high enough to hit the $75K–$80K threshold most DSCR lenders require.

So here are my questions:

1. How do experienced investors structure seller finance deals when they plan to rent to Section 8 tenants?

   • Is it common to transfer the deed at closing and give the seller a lien or mortgage note instead of using CFD?

   • Or are there other methods you use that still protect the seller but give you legal title for HUD compliance?

2. If a seller insists on CFD, what creative workarounds or strategies have you used to make it Section 8–friendly?

I’ve never had to solve this exact problem before, so I’d love to hear from folks who have navigated it.

Thanks in advance for the advice and any real-world examples you can share!

— Eduardo