We are purchasing a house with the intention of living in the house for a year and turning the property into a rental.

I usually just send a screenshot of a bank accounts, but I have seen others get their bank to write an official dated letter saying they have at least X available to withdraw immediately.I would not consider the letter you attached as a proof of funds, nor a contract offer, its more like a letter of intent? 

But rest assured, any built-ins, any woodwork, doors and windows, anything "nice" in the house that you put it once upon a time for yourself to enjoy is going to get damaged.I am closely related to a guy who moved out of his house five years ago to a new house, with the intention to fix up the old property a bit and rent it, and yet his old house has sat empty for five years and he's paid holding costs for out of pocket.

Whatever it may be, as a wholesaler with no intent to close on the deal yourself, you promise to solve the seller's problems while trying to assign your contract to a buyer without knowing what flippers are looking for, if the numbers work.

Earlier in my career I did it often, however (as others pointed out), with the intent to leverage once stabilized.

Bad idea to intentionally violate county/city rules. 

I know the rules for Owner move in state that: "The existence of a vacant comparable unit in the building which is also suitable for owner-occupancy is a factor demonstrating possible intent tocircumvent the Rent Stabilization Ordinance [RAC Regulation 613.04] ".

For you all that think a bank will repossess something for not repaying a credit card bill are incorrect, unless it was proven to be intentional.  

This portfolio was bought with the “fix and flip” intention but we could also hold them for cashflow if the market moves against us. 

The honest ones will always be honest, but there are a lot of "honest" people who are just very good liars and will phrase things in ways that are technically accurate but also do not address the intent of the question.