But begin by protecting the downside.

Down side is you're buying from someone who knows what it's worth and likely has it in top notch condition.

Was pretty painless process but the only downside was the the house didnt appraise (appraisal was $500) to what we wanted it to. 

If you have an expensive personal residence with a lot of equity you can hold that in a trust, but for most people its better to focus on getting a few deals done to first create some net worth before asset protection becomes a thing.You see that all of these tools have a down side (time, cost, energy) and you have to decide if the juice is worth the squeeze.

Obviously the biggest downside to having "Unnecessary inspections" is the time lost by waiting for the inspector, which I believe the City is still pretty delayed right now...I have heard good stories about inspectors being willing to "work with you" and be "reasonable" as in Eric's case above where since it was open below, they let it slide; and I have even heard that having good photo documentation from while the walls were open, they may even accept this and let it slide thru to Final Inspection!

The biggest downside is that they have prepayment penalties (they can be bought down/out, but that will increase your rate).

The downside if you plan on defaulting on this or any loan you have an account with is cross-collateral. 

The down side to multi family is that the purchase price is higher, so your 3.5% down will still be a substantial amount of money.Single family homes aren't a bad way to start either.

You cannot pick and choose.Two downsides to the RE Pro and grouping:1.

The downside to being an agent as an investor is that you have to disclose (at least in NY) that you're an agent when acting in the hands of an investor and vice versa for disclosing agent or investor.