The downside to this approach being less upside potential on raising rents over time if rents continue to climb. 

One downside to section 8 tenants is they typically take longer than a standard tenant and you will probably see a month of vacancy if you do not get the unit listed soon enough. 

They have a lot of liquidity in the war chest right now, downside markets provide some of the best deals, and they've been through their fair share of turbulence. 

Just though I would let you know that there are many down side of investing in real estate mostly do to tenants not paying rent or repairs so adjust your numbers accordingly. 

Most are not highly likely but it is possible which creates huge downside for the relationship.

Umbrella policy's are so cheap there is little downside to buying one if you actually have the assets to protect.

I'll start by saying it is my understanding that when buying property in the $20k-60k range, I'll be bidding against cash-buyers. Let's say I find a $50k property I like and I pay cash, then take out a HELOC. Then I f...

There is nothing to stop an unscrupulous person from taking your money and giving you nothing in return in the scenario you described, and unfortunately, a lot of unscrupulous people are in this business.IF you want to do that, you are essentially a private lender and need to act like a private lender taking back a mortgage on the property so the money you put in, your loan, is secured.Alternatively, I suppose you could enter a partnership agreement and make sure your interest is secured.Regardless, you need to CYA on the downside.  

The only downside I could see is increased break ins at night to get tools etc, so just make sure things are secure and your contractor locks up!

I don't see any downside to the strategy.