However, the bank can still go after the property if you default so you must be very clear with the risks with your partner. 

It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.Make sure your property manager is a licensed real estate brokerage.Understand you can not eliminate all risk, only mitigate it.

Bringing up to market rents will skyrocket value and return.Now, the risks.

That said, there isn't a TON of inventory and most of what is available is typically in the 8-12 unit range in a higher risk area.As for neighborhoods, I'd prefer not to post too much publicly as the area is rather geographically large and it's hard to get to specific.

You'll be taking on a lot of risk as a property owner/landlord, so make sure you have the spread that is worth it. 

I am currently leaning more towards multifamily because running the numbers in my head it seems to make more sense, however, it seems more multifamily homes are located in “bad” neighborhoods and I am wondering if it’s really worth the risk.

I'm not exactly risk adverse in the stock market so I would probably look at a solid large cap company with a 2-4% dividend that can be reinvested.

Again, I get my numbers from T12s and the risk adjust them up.

Then you flip it to a regional to national builder with plat plans already approved by the city or county.If you are selling off lots it can be tricky as local builders usually will only buy 1 to 2 at a time to see if that goes well to limit risk and have options on more lots.

Would you take a little extra risk for having a FNMA type 30 year residential style loan?