So that means if my downpayment is $80,000, $30,000 is really going to affect things:1) Capital raised.

The big ones are raising capital, underwriting / finding great deals, or managing assets.

It seems like it should not be legal, in effect taking something without any LL compensation (freedom to use unit for whatever LL desires at the end of lease).Besides my primary issue that the law changes an existing contract, it also makes it harder to get rid of less than ideal tenants that raises risks and costs.  

I just bought an off market condo $25k below market value, fully renovated (by seller), with in place tenants who raised their rent to my standard before I closed giving me $300 per month positive cash flow. 

I'm born and raised in San Francisco and ran into the same issue when I was starting off in 2021.

It is certainly immoral to raise funds without updating the information on a deal, but is it illegal?

I’d just raise rent by $5 per month lol 

Then it is a win-win-win situation, investor wins because he does not have to go do a lot of research , invest smaller amounts, get a single K-1, sponsor wins because he can raise larger amounts from a single fund of funds entity and fund manager wins by generating income from the spread.

I am in the early stages of developing a program to help people looking for raising private capital. 

My CPA has advised not making any moves until 2025 to avoid raising red flags ie cost seg, putting into service, and then selling all in the same year.