Up to now his loans have been B of A and WAMU and did many loans before the crisis took the limit down.

However, I have the same limitation as other would be investors(low cash).So I'd like to ask both the vets and the rookies...

Your involvement is limited to the sale of the unique "Equitable Interest" in the property which is considered to be property similar to a car, not real property.   

In my very limited experience the pros are that the profit margin can be very high & you can sometimes either pay for the home in cash or pay it off very quickly due to its lower value.Cons, because of the lesser value & the neighborhood it may be harder to sell if you ever decide you want to unload it.

But an individual with their unique risk tolerance is mostly limited by their perceptions instead of reality.  

I'm currently evaluating value add MF deals in Texasbased on what I can glean from my limited experience, sources of upside include:1. class c property with below market rents - potential to upgrade units and improve efficiencies to get to market rents2.  

@Sebastian Konior commented, yes there are some areas of Milwaukee that are a little riskier than others and where the $4k - $5k multi-families are located they are in the D neighborhoods, however there are some great areas that are in the Milwaukee city limits but in B+ neighborhoods.There is a great area that borders Wauwatosa, which is a great town that is growing.

A separate entity is the cleanest but they have costs and are not generally necessary especially if each person already has a limited liability entity set up.  

I don't think it is wise to limit who your contacts may become based on if they invest or not.

In my experience in Florida I've found companies that have written policies in one zipcode and reached a limit but will write policies 2 miles away in another zipcode.If you find you need commercial insurance then seek, Commercial Property Insurance, Commercial General Liability Insurance, and if needed Commercial Umbrella Policy.