Ultimately, I do think S8 requires scale and lots of efficiencies but has its benefits. 

What are the benefits and drawbacks of buying a seller financed home?

Additional DetailsI’m willing to invest in out-of-state properties, though I prefer areas with good property management options.My primary focus is passive income, but I’m also interested in value-add opportunities.I want to ensure these investments provide strong tax benefits and diversify my portfolio.I’d love to hear from experienced investors:What would you do in my position?

I'm trying to give them the benefit of doubt that he just DIDN'T know.

Paying off rental mortgages increases monthly cash flow but reduces liquidity, while investing in hard money lending offers high returns but is taxed as ordinary income.Buying a multi-unit rental provides tax benefits like depreciation, while purchasing a business can yield strong profits but requires active management.

One of the side benefits is that I can avoid the whole draw/inspection process (not overall inspection, just the ones tied to the draws) and don't have to worry about draw fees.

Another benefit of joining such a program is that it is a great place to find a partner if you'll be investing out of state. 

Also, I believe the tax benefits are horrible compared to the states, but I'm not too sure.

If your doing an FHA and plan to stay in one side you have to figure out what that would benefit you.

I'm just here to note that an LLC does not offer a single tax benefit, nor does it allow any deductions that aren't allowed without an LLC.