Now granted this is rare to the extreme but if your the one losing out its painful.

As long as you make your payments this sounds extremely unlikely from what people have said.

What sort of issues are we concerned about?

most bankers are standoffish ;-)yes, the HML/PML will be higher cost, but my concern for you is the banker knows he can't do your deal, but will string you along for a while, ask for additional information that takes you time (and maybe cost) to put together and he ends up either ghosting you or taking 6 months to tell you no.I could be wrong and you may be dealing with a "unicorn" banker, but I believe a HML/PML that knows construction in your market will be easier to work with, actually close your deal, and end up "saving" you money in the long-term...just my 3 cents - even inflation has increased this!

So everything has to be as extreme as possible.

The concern with out of state investing is your money goes to down payment and property management.

Realize these same concerns apply to other Syndication asset types also.Do stress tests against the deal for both hitting the financial targets and also the Capital Stack impact.

If the answer to both added questions would be "yes", then you have a potential goldmine here.Combining the seller's concerns, and the reality of a big down payment being a negative to the seller (see Q: 1), you should be able to set the terms, with a lower DP, and controlled interest rate, to have this property CF and,...be able to sell the package to another REI down the road,...as long as you buy this using an LLC (a new one). 

Car washes are extremely profitable, too. 

I wouldn't let any concerns about this deter you from investing in Section 8 (or other) properties.