The risk in the transaction

It is very easy to understand how the Va_landlord works. Basically you work as bank. So ask yourself when you buy a house and get loan from the bank, why the bank want to loan you money?
1. They are getting interest, which is the same purpose as you.
2. Are they worrying that you may default? yes. Same is for you. You will need to worry VA-Landlord default the loan.
3. How the bank deals with such risk? A). By checking your credit. Which is important for VA-landlord. B). They also need to ask for some down payment. Whe you pay 20% down (bank checks for house value, you need to do the same, that is why his purchase price 30% lower than the market value may work, but you need to see the apprisal), bank can afford to loan you 6% or lower now. Suppose a guy who comes to you for a house with 0% money down, you may reject it right away as a bank. Well, somehow that guy has a very good credit history and has demonstrated ability to work on the deal, the bank may take a risk, by doing so, they charge a higher interest rate say 10%. As the bank, you take the risk of default the loan and ends up have to foreclose the house. If the house is not worth the money you loaned him ( for example, the house market kept going down for another 20%), you have really bad luck because there is nothing to prevent him from walking away this house. You also want to make sure he has good home insurance on it as well. Keep in mind there are cost in foreclosure and selling the house. So even if the house worths exactly the same he bought it, you are still losing money. That is your risk as a bank when taking a 0% down. But that is why you can charge him 10%--the risk.
Another issue is that he is fully leveraged and cannot afford any mistake. I don't know how he protected his liability but I am sure(or hope) he know this. If one of his tenant get into a big liability lawsuit to cause him trouble in cash flow, it will trigger no payment for many properties and end up default all of the properties. What about his wife getting a ugly divorce? Or he has bad health and as problem manage the property? Not everyone has the ability to deal with a tenant. What if he has an accident? If he declare bankruptcy,you are just one of the many lenders trying to collect his debt. Good luck and you may end up nothing. For example, he did not pay tax for the properties and someone end up with a tax lien to foreclose the house, your lien will be wiped out. That is the risk.

But In general, those lien is working for you the same way as the bank, it is safer than most other options. The only issue is whether you can afford or want to end up with that property. Knowing exactly what is your risk by thinking as a bank in this case.