It is clear from the interview that their main skill set is raising money and they partner with other "Co-GPs" who focus on the operations. 

Since you can't control the sale price, you basically have a $4k cushion to your reno costs, or otherwise you lose money compared to the as-is scenario.

They saved up money.

IE motivate them for money. 

Also CA requires you to be licensed to originate DSCR and Hard Money Loans (I see on your bio you service CA), and there are many other states that are starting to follow pursuit.

I would rather do this and retain my money then give it to the bank as interest. 

My partner and I keep an excel spreadsheet of rent, our purchases, utilities, taxes, insurance, and money spent on contractors.

Many other investors have asked themselves (and others this question) but what I believe it ultimately comes down to is what are your goals (how much money you'd like to make), are you physically able to manage it yourself and do you have the right organization and systems in place to do it on your own. 

  :)  Many Indians send money back home to repay people that bankrolled their studies in Canada. 

Notes are all about velocity of money - faster the money comes in the more valuable the note.