These questions will also help you figure out what schedule (C or E) you should abide to which then might actually dictate the need for entity formation as it could dovetail with your tax strategy.  

With all section 8 tenants, the property is likely in a C or D area.  

In construction anyone who is large enough to be running multiple jobs no matter how anyone wants to lament about it, money and honey is what is driving projects.You can bet on two things :1) That your contractor is paying really good attention to the jobs where the profit is good and payments are flowing simply without fuss and like water and the customer is easy to work with and get along with.

BUT if the real estate is owned in any type of company (LLC, C or S corp) then that same tax credit does NOT apply.

You are looking at C- or D product with that little cash in most markets.

Which (personal opinion) is why so many people start off in wholesaling or buying an SFR in a C- or D neighborhood. 2.)

Or, did you simply bet on appreciation during the time of purchase, while looking for something that would at least break even?

They can hold for a while and bet on appreciation or just protect their capital.You and I and any other syndicators have to work long and hard to find the good deals that are worth our time.  

Wanna bet on whether he gets it or not?

I realize that the classification of A, B, C, or D properties discussed in this forum are basic rules of thumb, and can certainly vary by location, quality, age, etc.