Even our short-term rentals had a rental agreement with policies for payment, penalties, rules, etc.Here's something from AirBnB regarding rental agreements: https://www.airbnb.com/help/article/465 

On my end, I set my payment schedules, how it will be delivered, level of work I expect, etc.

I was able to give them a warning, and was in a position to negotiate a purchase or refer them to someone who may be able to help them.I would explain their rights and what they could do to delay a foreclosure auction sale.They could:File a counter suit if they feel they have been wronged, that the bank did not credit payments on time.

I heard Section 8 does not allow extra non-benefit member living in the house. 

It is non profit, and we don't allow coaching etc.

And in the end didn't make me money and the loans I had on them actually prevented me from getting additional loans on other better deals.Anyway, here are the specifics:1) purchased 7/1997 @ $80k, $500 down payment, cashflow appx $150/mth as long as there were no major repairs or maintenance items, great % returns but very little $ returns.Sold 5/2016 @$67k, after about $7k rehabwas about $250/mth cash flow at time of saleOh, and it took many months to sell, therefore costing me additional holding costs with no cash flow2)  purchased 9/1998 @ $71k, Similar and same area as #1 - $500 down payment, cashflow appx $150/mth Sold 4/2016 @$72k,after about $9k rehabwas about $250/mth cash flow at time of saleand also took many months to sellFor fun, I just looked up their zillow as of today and 1 recently resold for $85kNow, today, there are a lot more resources to easily research market areas, etc, so I now do more research to find markets with more demand and growth potential. 

Get some solid numbers on what a payment would be. 

However, If you use a bank, plan on a down payment of 20%, that's $80,000 down plus about $5,000 in loan fees and $3500 in closing costs.

I am not sure how people make money with all breaks/fixing/non paying tenants...

I'm contemplating renting out an investment property(non-primary residence) on a room-by-room basis with separate longer-term leases for each bedroom.