Or, in the case of a rental property, your mortgage payment could end up being more than you're able to collect in rent if rental rates decrease.

If you buy in a nice part of Chicago it's pretty easy to self manage after you move out using services such as Cozy for rent collection (it's what I use and automates the rent collection). 

I just don't understand why he would allow payments to go to collections.

Ideally, the property will be complete in 2-4 years at which I'll just sound the contract and collect whatever appreciation occurred over that time.

I spent hours collecting the data.

I've heard stories of investors, for example, that owned one property in California, and a multiple properties in other states, and the state of California expected to collect income tax on all out of state properties and income just because the investor had a single property in California. 

(smh) (a) No person shall engage in the business of debt collection in this state without first obtaining a license pursuant to this division.

In 7 years, he will collect $185k-$210k in gross rents (excluding any increase in rental rents over that 7 year term).

I would imagine that with smaller properties a set monthly fee instead of a percentage of gross income collected could be the language in the contract.

(the reserves requirement is a little different for Freddie)Freddie Mac guideline:Each Second Home or Investment Property Mortgage must meet the following requirements:• Each Borrower individually and all Borrowers collectively MUST NOT BE OBLIGATED ON (e.g., Notes, land contracts and/or any other debt or obligation) more than 10 (ten) 1-4 unit financed properties, including the subject property and the Borrower's Primary Residence, provided that, when the number of 1-4 unit financed properties (including the subject property and the Borrower's Primary Residence) is greater than6 (six), the Mortgage must:o have a minimum Indicator Score of 720 ANDo 8 months of the monthly payment amount on each additional second home and/or 1-4 unitInvestment Property that is financed and on which the borrower is obligated.