I would be apprehensive on history of bed bugsI would say no if a previous landlord gave me a bad reviewand anyone in the world who threatens me out of some perceived moral high ground in an effort to intimidate me so they can get what they want at my expense, well they are surely to receive only my most vile behavior in return.I wouldn't just turn this person down, I would ask to meet in an empty parking lot and fist fight. but then again, that's just me, and I'm feeling particularly hostile today. real answer: you should pass, and stop communicating with this person

Almost half of my portfolio has Section 8 tenants in it and as non section 8 people move out i try to move in more Section 8 tenants but i make sure my property manager screens them THOROUGHLY....not with just what's on paper regarding credit report, income and past criminal activity (If any).....I make sure my PM screens to make sure they have no pets, no evictions, no smoking OF ANY KIND and no felonies and we still get TONS of people calling...the biggest problem becomes picking someone from who is left.   

Particularly if the loan has changed hands several times and it's delinquent, they are traded at discounts so their cost base might be far less than total owing.  

And do the regulators regularly assess large fines for non-life threatening non-compliance issues?

Technically the structure of Qualified Opportunity Funds since they are privately help (either C-Corp, or partnership) can accept investment from non capital gains monies. 

However, I know of 1 in particular who is willing to consider using the appraised value after 3 months of seasoning so options do exist. 

Have you found any particular markets based on your analysis that you like?

Cash flow from that single property would be considered non existent for probably 3 1/2 years.

I'm being particular to not overpay, probably too particular.

A very common thing I see is people have a "mortgage buddy" who is great at residential stuff but totally novice with non owner occupied investment property loans.