We'll keep the property in the family and use it as a rental, with capital improvements along the way.

A staged lease-reading followed by a Q and A is much more the kind of training and performance exercise you need in the landlord-tenant relationship.Of course, once you get up past a certain number of tenants, holding these kinds of formal lease-signings is going to get very hard to handle and/or you're going to get sick and tired of showing up.

Appraiser will of course see your purchase price and treat it as a data point, best way to overcome that is to hand him a before/after binder that includes all improvements you've done to the property etc. 

What is normally done, is it typical that they get paid regardless of their performance, or lack of performance?

The one that I'm sure I have a lot to improve on is managing contractors. 

Are you planning on trying to force equity by fixing it up and making improvements yourself?

That way, you can sell the re-performer for more.

The quality of tenant is the variable, most people that need section 8 are good people who just haven't quite figured out how to improve their situation in life, they just want a place to live and will generally behave if they have a solid, clean, safe place to live.Make sure you check local laws and rules around section 8 so that you don't get yourself in hot water, perhaps get in touch with the existing owner/property manager and see what there experience has been with section 8 and especially the current tenants. 

What financing options would I have if I wanted to purchase land adjacent to my home without building improvements on it?

Not getting it rented or not for what you expect to get or having to improve the places to get the rent you expect.