Because fewer units reduce your economics of scale and will never allow the property to produce enough income to warrant the work involved. 

Because of leverage, I was able to buy a $1.95 million asset that produced $40,000 of positive cash flow a year while I waited for appreciation. 39 months later, I sold the property $5.2 million resulting in a total profit before taxes of $3.7 million.

my understanding is also that "active" would generally mean :‘regularly and continuously’ engaged in the business of leasing or renting real estate for income or profitnow we enter a grey area of conversation and back and forth, etc. on what this means.... just thought i'd drop this out there.... thoughts @Michael Plaks ?

Seattle is a great city to live in while investing in Columbus Ohio small multi-family that produces cashflow each month.

Section 8 or regular if it doesn't get approved.

You might be able to convince a seller to hold the mortgage note (ie seller financing) and have you pay them in regular installments, but even in this scenario the seller would typically request some sort of initial down payment.

I was chided for "giving legal advice" on another post when I was telling about my experience, so that this does not happen again I'll say I am not an attorney, just a regular investor passing along what I was told so you could compare it to what you have been told by your attorney. 

Honestly wholesaling and commercial brokering wouldn't be a bad combination other than that your income is solely based on your ability to produce.

Are they renting it out to porn producers and college party animals?

That is too volatile to give larger regular loans on commercial properties.