On the down side, it takes apartments out of service for residents and turns them into hotel rooms, thereby screwing with supply and demand and making housing less affordable for people who live there.

Some S8 agencies are requiring CofC for new leases and annual renewals.The city government is pulling out all the stops to force landlords to comply.this is common in many markets.. not sure it doom and gloom on values.. owners will just have to pony up .. that is one of the downsides of buying property were very few sales are made to actual home owners and 90% plus of the sales are to investors.Over in Cleveland you have some very stiff POS  type rules and that has not killed values.. owners will adapt is my thought.. wont like it but will adapt. 

When I looked in to these loans about 5 years ago I ran in to 2 big downsides....I couldn’t sell one of the properties without paying off the entire loan.

The downside is you will need to live there, for a minimum of one year (to satisfy FHA Requirements); AND because you closed personally, you will not have Asset Protection, in the form of closing in the name of a LLC.

It was our only transaction last year which set us back from our cash flow goals, so that’s the downside.

Obviously there is potential for downside financing the investment, but I don't see it much different than investing in properties myself.

Keep your downside risk low as you build up both your financial position and your expertise.  

The downside is the hassle and expense (in Maryland we have to pay $400+ filing fees every year to keep the LLC in Good Standing).The upside is the potential for limited liability, however I've heard from various lawyers that the corporate veil is easy to pierce unless the LLC is completely separate from anything in the owners personal life.

The only downside is if you end up needing the entertainment center anyway for a dvd player, dvd, or media device.

Downside is most tenants are going to want a longer term starting point if they're moving into a new place.