Only people that would do this would be drug dealers.

The reality of running their own marketing, prospecting, administration, book keeping, etc etc etc, hits people pretty hard and they perform poorly in one or more areas and ultimately fail.

You may want to assess an Administrative Fee for the additional paperwork. 

And collecting a judgment on a drug addict is impossible.

Does the investor create a business entity, then contact a loan servicer to essentially broker the administrative part of it?

From HUD website:Federal Housing Administration Increases Dollar Amount Threshold for Large Multifamily Loans to Be Eligible for Standard UnderwritingChange facilitates greater flexibility for lenders when underwriting Multifamily transactions up to $120 million.WASHINGTON - The Federal Housing Administration (FHA) today published a Mortgagee Letter that increases the threshold at which a Multifamily loan is considered a Large Loan from $75 million to $120 million.

Jessica Chandler, Administrative Specialist, Washington County Sheriff's Office, 215 SW Adams Ave.

It's going to be really hard to run background checks on every short term renter and the concern most of the tenants have living there is that you're going to be renting it out to criminals or drug dealers etc.

I personally don't care in some of the areas I've landlorded in if the person is a quiter type of drug user or even very petty dealer.

There are some advantages to going with a Solo(k) as mentioned by Brian, but there are also operational and administrative items, as well as estate planning impact when having a Solo(k).