The lack of capital gain would already be a huge no no for me but so is the inferior property title (foreigners can't own land in Thailand).There are so many better ways to make a 10 - 12% ROI, which by the way you're not guaranteed to get (which would be ok if you could get capital gains)!

Is there a better guarantee that he won’t go MIA again?

The guaranteed payments from the housing authority is appealing to me.

I love section 8 because it guarantees a certain % of rent, the tenants really value that housing voucher and won't do things to risk losing it, and section 8 has strict criteria for condition of the unit which adds a layer of accountability on my property manager. 

This is referred to as a sunk cost.Your revenue and expenses are going to be what they are, your question really translates to whether you think a 7% pretax fixed and *guaranteed* return is good relative to your opportunity set.

Also, there is no guarantee that you will have favorable interest rates in the future.

It's no guarantee but it's a good place to start.

However, I have a few concerns:Pros:Living condition: 1400 sqft → 1700 sqft with some boutique featuresThe rental market seems good in this area.Another property is added to my existing real estate portfolio, which currently includes two other properties.Cons:Interest rate: 7% - No guarantee of decreasing the rate, which means there might be no opportunity for refinancing in the future.The current home is too new to be rented out.People often say not to buy property in Chicago due to high taxes and low appreciation.There’s no necessity of moving since I have a decent primary home.Any professional advice would be helpful. 

As of now, most banks don't recognize the split model and only run numbers on the LTR units since they feel those units are guaranteed income. 

It's no guarantee but it's a good place to start.