Builder Financed Home Flipping

[Adam St.Marie]

I have been pursuing multiple strategies for flipping houses and being able to pursue my goal of restoring neighborhoods. Along this line of thinking my investors and I have been considering builder financed projects. I am still trying to wrap my head around the details of this strategy and I am posting in hopes that others may have gone ahead and have some of this sorted out. Here is the concept that I am considering.

We are currently targeting middle income families. When a family in this financial bracket needs to move they do not have the money in their savings to be able to purchase another home especially if this home needs some work.  Are there companies or systems out there implementing a strategy that would incorporate a contract stipulating something along the lines of, "We will acquire this mutually agreed upon property, buy and renovate it with our investor capital and sell it to you (the customer) for x amount which is inclusive of our profit."? Obviously the sale of their current property needs to be worked into the contract in some nature. 

My thought being this would create a market of more personalized and targeted customers who, with the right marketing, would come to me for their projects. It is similar in concept to the "Fixer Upper" show only as far as I understand they do not finance it. 

The issue I have here is the complication of the contract structure and understanding how to protect myself and my investor and still render a great service to my customers. Also acknowledging the necessity for the customer to have personal skin in the game, that may not be 10% down but needs to be significant enough to them that they do not back away and we are caught with nothing. The deposit would be kept. 

I am curious as to whether I will find myself targeting a market that has been overlooked previously. Families looking for custom remodeled homes and the financial backing to make it happen while they are still in transition from their current residence. This may be a way to secure the questionable part of real estate investing which is, "Who will buy it?". Since the buyer is lined up and the flip becomes a team effort I would be able to consider reducing the profit margin on each home opening up a range of home buyers I couldn't previously reach while guaranteeing my investors x% ROI.

Question:

1) Is there anyone out there doing this that would be willing to shed some light on the intricacies of it?

2) Maybe this should be first: Any thoughts on whether it is a good idea or a bad idea? (The goal is to make decent money but not incredible money. At least no yet. I realize there are much more profitable ways to invest in real estate but the goal is to transform neglected communities and make decent money along the way. I believe that scaling it in the future and diversifying will be my main money maker.)

3) Do I need a relationship with a mortgage broker to transfer from my ownership to the new home buyer that would make it a more fluid operation instead of waiting for financing to clear during the project. 

4) Would it be best to have my investor pull a loan on it and then transfer that to the home buyer? (We were going to just operate on a cash basis initially.) 

5) What am I not considering that I should be? 

Any input is appreciated.