Personally I like leverage, it has allowed me to recycle my money and scale quickly.

Although it may be a while as the next down cycle is probably around 2024 if you believe the 18 year business and RE cycle.

I've even heard of GCs using auction type settings for returned items at Home Depot and Lowes for steep discounts.I've learned a lot about the GC game as I was up close to over 40 projects last two years and some went well and some did not and when they did not it was all Contractor related.If a GC isn't sourcing cheap materials at the same time milking the hell out of his 150-200 per day workers, then you can find yourself eating into your margins real fast. 

That said, I prefer to use a HELOC for short term investments like fix & flips because I only pay for what I use and I can continually keep recycling the money.

Living in one unit while renovating the other lets you build equity and generate rental income, plus the BRRRR strategy could help you recycle your capital for future deals. 

To me it clearly seems their distributions are just recycling investor dollars or am I wrong?

Usually it's something like that I feel they are trying to milk the project for extra time when it should be just about done and they start showing up for half days half-assing it while clearly starting another project for someone else.

but the reason to do them is to build equity and recycle capital.

I am willing to be dollars to donuts that most of your Section 8 tenants are able-bodied humans intelligent enough to get a job and pay their way through life, but they somehow manage to milk the system.

I get a LOT of these “we want to buy your property” mailers (immediately get thrown in the recycle file), “I have a buyer who is looking in your area let me sell your house” letters, physically approached by agents and people and I get  “we’re a family and we want to  buy your property “ pitch.