I personally have had positive experiences with section 8 tenants because it's a long process to get the privilege of rental assistance and many people don't want to ruin it by mistreating the property that would make them eligible for eviction.I see that you're in CA, if you ever need a realtor to seek out a good fix and flip for you, let me know, I've helped plenty of people before!

Problems are compounded as the number of units grow. 

In Canada, notes for fixed-rate mortgages are compounded semi-annually, not in advance while an LoC will be compounded monthly (at best) or daily (at worst) with reality being something in the middle (i.e. compounded monthly based upon daily average, highest amount, etc). 

. - Inefficiency with payouts and administration will be compounded as the FAIR Plan has zero experience with a major pay out and lack infrastructure of assessors and technology to distribute the funds they don’t have.

Caveat is that you should be reinvesting those profits back into other smart investments so that you aren't missing out on compounding gains. 

Quote from @Dustin Calgaro: Man I really screwed that math up, I didn’t compound the appreciation.

My Question is if i have a private investor loan me $70K for 5-7 years (his terms) at 12-15% (not compounded).

No it does not compound like that 

Taking the loss now is preferable to paying out monthly for the privilege of being a landlord.

(a) market price appreciates at a compounding rate AND so does (b) rents appreciate at a compounding rate.