Or do I just take a small hit on my taxes because I am essentially claiming that I am collecting more than I am?

The cap rates appear attractive at first glance, though a thorough analysis of the local markets is essential, especially the long-term vacancy rates.

Is this essential?  

So if it takes a month to find a new tenant..then we are essentially out of two months rent for the year.

It is fairly low-cost and efficient (you can always scale your entities as you grow; there is no need for an ultracomplex structure at the outset), but it is essential to ensure that entities are appropriately maintained. 

I will essentially be managing the entire property/collecting rent and my friend will not have to lift a finger. 

Contrary to how youtubers glorify the profits, property-flipping is essentially a value-add/opportunistic strategy and the key risks you, as the investor, are taking are 1) asset prices, i.e., how well will the market be when you sell the property, and 2) capital expenditures, i.e., can you financially efficiently improve the asset to the end users (renters or users).

If you can do that then you have answered most of your questions - essential skills, client relationship, exceeding industry standards, etc.

Essentially he rehabs his properties to make them undeniably high quality (not just "good enough" for section 8) in order to generate a huge demand and thus be able to be extremely selective in his tenant screening process. 

Travis mentioned delayed gratification, which is essentially what I'm reiterating here.Furthermore, Read "Set For Life" to enhance your mindset regarding financial literacy and apply the practical financial steps Scott Trench mentions in his book.