I hear there are downsides to it but I haven't bothered to look into them yet.

The down side of this is that any existing loan likely has a due on sale clause that can be triggered by this transfer.

The downside of the hosted version (and the reason I am still looking at a local install) is the reporting functionality is a little more limited than the full install. 

The downside is that the tenants might not stay for long, and you might have more problem tenants.

Rural, tertiary markets can be great to invest in, but there are downsides too such as lack of liquidity (especially if the market turns), lack of appreciation potential, flat rent growth, high vacancy/ low rental demand, difficult tenant base to manage, lack of professional management options, etc.

The only downside is because it’s not a primary first, you will never qualify for 100% tax free capital gains.

My two biggest questions are if you when first buying the property would finance with a bank (is there any downsides to that compared to hard money lenders?)

That is the downside about buying at an auction, they sell properties as is and you have to assume the responsiblily. 

The downside is that it takes more coordination because you have to manage the tenants as well as the rehab. 

Downside is potential noise issues depending on building and if course dreaded hoa.