And other downsides I may not be thinking about.

Some downsides I have in mind: harder to find properties with a good ratio of bathrooms to bedrooms, more expensive to buy a large property upfront, higher monthly maintenance costs (I would probably pay for utilities and communal furnishings), and interpersonal conflicts between the residents. 

The down side is to manage the cases were the tenant walks away from a balance due, forfeiting the contents. 

Even if you convince a seller to finance things for you there is downside risk that requires capital.

The downside is that you have to become comfortable learning to vet sponsors (which not everyone can do) and will pay a management fee.

You can find great ROI's in all of those areas and avoid some of the potential downsides you might experience in Detroit and Flint if you are not a local with eyes on the property regularly. 

The downside is of course, that houses cost more. 

The down side was he had to fly down there every other week to make sure the contractors were actually working.

And also remember oil's at $30 and it can't go to zero but it can go to $150, so your downside is very limited and your upside is huge.  

I definitely see the downsides to this approach, but I can't convince myself to just put "lipstick on a pig" and do it a cheaper way.