The risk is being able to get tenants out.

Beware of the FHA loan Risk Base fee - the equivalent of a PMI that you can't remove like the PMI.7.

I mean I am an accidential builder.. having foreclosed on builders in the crash and having to finish the projects... so I have some very special education you only get when it happens to you and you have to figure it out.. was not pleasant. and it cost million or so.. but I got out.. and then I realized Hey since as the lender I am taking all the risk I mine as well just do this myself.so here we are about 150 plus new builds later and things are pretty good.Now to be fair my rock star in Charleston build a home last year then calls me and says OOPS house is 1 foot to low we have to raise it.. that's a brand new 700k home that has to be raised a foot.. cost 30k..

It was crazy to think when comparing the risks, how less risky a duplex was vs the 10 unit (huge old building/a lot of operating expenses)The prior 3 years only grossed $75 k on avg which would mean we would lose in first year if it did those numbers.  

Additionally, we are usually a month ahead on our mortgage payments to de-risk the timing.

The risk is that the cleaner arrives and the water is off, now I am looking at at least another 2 or 3 days of vacancy to reschedule. 

I think the play is for entry level new construction, but it is inherently high risk.

Smart investors must work around rules and take risks to survive. 

I have done so in the past myself but obviously had seller accept a larger discount due to the increased risk of default.

If you're worried about legal risk, don't start a grow operation.