At all my rental properties I carry the comprehensive insurance plus flood insurance. 

You'll just need a clear exit strategy and you will carry slightly higher interest rates than a more experienced fix-and-flipper. 

Sears scratch and dent seem to be the most competitive, and to your points will not carry much weight in terms of warranty / service given the struggling brick and mortar model. 

And just carries forward to a year in which you have passive income to use it against, or when your income is back below that threshold. 

If the condition is just too bad for this, and rules & regulations prevent this, consider #2.2) Seller Finance with a reasonable down payment and carry the note for the difference. 

We also have to be tighter with the numbers on our flips, has to be an even better deal for us to carry the risk moving forward.

Conventional loans do not typically require residence.You just need to make sure there is NO pre-payment penalty for paying off the loan early.Also you will need all the repair money and carrying costs available in cash/credit. 

Carry on !! 

If he is 80+ and just wants the cash flow, then give him 5-15% down payment and have him carry a note for 5-10 years at 5%.

@Brandon Turner also mentions in webinars, you can carry a hand written letter (or create one using) biggerpockets.com/dmletter and keep it in your car for an opportune moment.