Practically though it seems on most posts with a difficult tenant someone will bring it up and if tenants google their situation on what to do they will see the practice. 

I don't personally look at single family in Mpls because I think it would be really difficult to cash flow, unless you were renting section 8 in North Mpls, which is a niche I know some do very well in.

Legal issues aside this would be a ridiculously difficult business to make any money in.

However, with this strategy, it seems with a higher mortgage rate from putting less down and the cost of PMI might make it very difficult to find a cash-flowing property. 

Here are some of the downside I can think of: 1) PMI costs, til 20% LTV2) over-leveraged with larger mortgage payment (more difficult to cash flow) 3) no refi until at least 20%3) other?

When you're competing with many other first time home owners and a shortage of product, it's extremely difficult to enter in.

I think that HELOC on investment may be very impossible, difficult, or expensive. 

Difficult to make decisions, and can become gridlocked. 2.

Good contractors are not difficult to find, they are difficult to hire in this economy.

You are correct in that that market is extremely hot right now and it can be difficult to find deals.