Another example is that with a tax auction it is common for all the interested parties to not be notified 100% correctly meaning they could in theory come back later and try to reverse the sale and take the property back!

This is correct, so I would disclose every aspect of the sub to and how it relates to the seller, perhaps going so far as to insisting the seller sign off on an acknowledgment that he understands the ramifications.  

@Anthony Angotti Correct!

If I do a cash-out refi, it will change my interest rate, correct?    

You speak correctly that "anything is probably possible anywhere but highly unlikely" to you.You are also answering a question that wasn't asked.

When you go to sell the property, if you produce a certificate of inspection for the wrong number of units, buyer unless you are giving them a great deal and they will throw caution into the wind, would insist on the correct designations.

The problem is you can't afford to properly make repairs when you are dealing with the lower tier properties and go with the cheapest bids doing nothing but putting duct tape on issues that will become recurring or believing you are making the repairs correctly but use inferior labor and materials because its all the property can absorb cost wise.  

As important as due diligence, analysis, knowledge of the property type, track record of the syndicator, correctly predicting economic trends, and timing is, the number 1 way to avoid a devastating loss is NEVER INVEST MORE THAN 10% OF YOUR INVESTABLE ASSETS IN ANY ONE DEAL.  

They tend to cash flow really well ;) @Nathan Gesner is correct, however.

Simple Truths.But you can make a ton of money, if you do it correctly.