One thing I'd think about is that some of the retail products which do this seem to be useable in a 1031 exchange and some not, so I'd keep that in mind when selecting what to invest in, if 1031 exchange is part of your strategy.

I am seeing section 8 rental rates on the 2025 FMR, the number is about 5k for a 4 bed.So is it just that I rent out a house that has the proper number of beds, and renters will be wanting to get the house?

First my products do not cost $7K.Second:You are willing to spend $300K+ on a crappy house hoping to fix it up by spending an other $200K on it hoping to make a $60K profit after 6 months to a year,  But the thought of spending $7K to make continuous $100K+ profits with far lower risk, with all the proof shown, evergreen forever getting you these deals for free makes you cower in fear.Silly don't you think?

Alignment of interests: HAs the sponsor properly conveyed the risk in investing in real estate?

You would be violating the law for doing that.Be comforted that most prospective residents don't provide proper ESA documentation. 

If your product is in the top 10% of what's available and you are asking the same price, it should be flying off the shelves, hopefully for over asking. 

That means, buying at the right price, with the proper SoW and good comps to project a nice ARLTV.

It is properly called ordinary business income and is taxed at the same rate as your W2 income, PLUS 15% self-employment tax which is Social Security + Medicare.

Reno properly, screen properly and do the paperwork, YES thats it 

My only reservation is the higher interest rates on these particular loan products vs regular residential mortgages.