For example, he may want the entire amount in cash so he can buy something else, take a trip around the world, or pay off his gambling habit.

If you have $50,000 to 100,000.00 to a guru you should use it for things like down payments and reserves instead of their lambo, playboy model girlfriend, rolex, g5 and gambling trips to vegas!!!

(especially for those who don't already have significant building experience). ...there are just so many uncontrollable (and often un-knowable) things that can and do go wrong with a new build... 

I guess if you have decided to gamble strictly on appreciation on a single fam, small multi, or other type of property, then you might 'overpay' if you think the property will appreciate in a time frame you find acceptable.

There is no way to know if the next 20+ years are going to be anything like the last 20, or where etc. it is very risky to gamble solely on appreciation, but as long as you are never forced to sell it could be very worthwhile. 

Is the gamble of little cash flow worth the potential opportunity in appreciation, tax benefits, loan pay down and potential refinance in later years?

People here have convinced themselves that the lower risk assets are gambling, and the higher risk assets are safer.

Neither plays blackjack, so I think we are pretty safe there, I would probably be more likely to gamble with money in my account then either of my lenders :-).

The LP yield is not guaranteed so it's definitely a gamble if you aren't doing your proper due diligence on not just the GP but the project pro forma itself.

Yes - appreciation can outpace the expenses but at that point you're gambling if the property doesn't cash flow.