Is there no difference and why does everyone's default statement say, "Find a private lender, they will be more favorable on terms?"

You could draw up papers and make your ownership  stake(probably best in an LLC) limited to the compensation for your management efforts and shelter yourself from being pockets in a default situation. 

But, it is scary if you are a third party property manager.Do you know when the lease was terminated for the default? 

Individual private lenders like myself have the flexibility of doing that, and basically it ties two properties to one loan, so if the loan defaults, it's actually going to be backed by two properties.

Personal guarantees are more used for leverage on the principals in the event the note goes into default.

If student loans are in deferment, the Lender will default to .5% of total balance; in your case, that's $385 per month.

If people aren't willing to do a down payment, they have nothing to lose if they default on their loan....and if they can't save enough for a down payment, are they going to be able to pay the mortgage, property taxes and regular maintenance that goes with owning a house?

What this person may have been trying to imply is if you get a loan via a DSCR lender, and you live in it (effectively putting yourself in default) they may actually trigger the acceleration clause and you'd then have the default rate that was agreed to in the loan docs ....

@Nicholas AdamsCons are if they default you may end up spending $7-$10k and taking a years time to foreclose- basically in this deal after you got $7500 it’s not worth it to foreclose on the borrower as you will spend what the property is worth.

Cons: 1) Credit hit to both of our scores 2) Potential default affects both of us (does this matter if both of us are on the LLC?)