I'm working on my plan to start flipping houses and I figure if I can work my way up to a $300k line of credit for my LLC I can fund 2 rehabs at once and cover carrying costs without having to use my own cash.

Besides liability, loss of use is very important to require and I have had success with tenant carrying loss of use. 

I was into the transaction about $12,000 total ($9,000 to the sellers and $3000 in closing and carrying costs.) 

I'm glad to hear it's working out :)@Ola Dantis That's an excellent point - at this point, I don't plan on carrying a balance unless an unexpected expensive repair comes up. 

The holder of the note makes no real difference; in Jane's case, it might be more advantageous to her to hold the note than sell outright depending on how she can absorb the sale from a tax perspective; in your case you don't have enough income to do a conventional loan so getting a seller carry can give you more properties.

Make sure you properly report your capital losses and carry them forward.  

You substitute a treasury bond yielding 16% with a coupon of 10% which you purchase for 60c on the dollar as collateral for the mortgage on the property with the mortgage that is carrying say 10% interest.  

Certain liens can carry over after a sale.

All this while carrying an eviction and several vacancies.

I don't want to carry any dogs in my portfolio.