Will the interest rate remain 0% until you sell the flips?

Is there a way to transfer the loan agreement to my name or try some owner financing/selling strategy?

If they can build a larger home and sell it for the same or more rather then building a couple small homes why do it?

I asked if he was willing to sell the house cash? 

There are also few things better than tax free cash if you want to sell it and move out.

Are they really willing to sell and walk away with zero dollars up front?

Open houses are typically used to generate leads, not sell houses.

I'm trying to Figure out how to make this potential deal work.Seller wants to sell but not right away because they still use the house for some income. 

If you’re not occupying the property and plan to either sell it or keep it as a rental, you might want to consider a bridge loan through a hard money lender.

It's a small place so I'd guess it won't rent for enough to cover your expenses anyway so I'd probably sell, especially if the loss is small, it unless it's in a great neighborhood that you think will do well over time.