Business Plan Sanity Check Question

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I'm beginning to define my real estate investing business plan and I have a question. 

At the moment, I'm reviewing buy and hold properties for all cash purchases.  These will likely be Class C or D neighborhoods. 

I'd like to end up leveraging those properties to obtain / financing for multifamily rentals. 

What do you think about this strategy? Anything I'm missing? Any pitfalls you foresee?

I know a man who started in a class d neighborhood. He bought one or two homes that needed a lot of work. He fixed those up got them under HUD(section 8) then after 6 months he bought two more. He did the same thing. He now owns around 100 properties all with HUD. He has a net value of millions. When his tenants can't cover their part of the rent he pays them to do work on the next house or to mow lawns at his current properties. He also works deals with his tenants to leave the gas and electric and water in his name if they need him too and then charges them $5-10 a month plus the bill for their rental. Again if they can't pay then he has them do work. He keeps his Section 8 payments flowing and makes a ton of cash.