Obviously this would eat at the cash flow, but i figure if i can keep reinvesting their initial capital I could purchase so many more properties than on my own.

While you are slaving, eat ramen, roommate up or live in trailer, avoid Starbucks and tuck every dollar you can squeeze out into a bank account. need 20% down and money for materials. so for 80K home (trashed), you will want 35K banked to get started, just a rough idea.

There were problems right before closing that my agent expected I'd eat an expense that was in the contract on the sellers side.

It basically eats your profit and you pay less taxes. 

I would just eat the cost, personally!

As a buy and hold investor, you make money while you sleep, while you are backpacking in Europe, while you eat, etc.

I could demo the entire kitchen and eat take out for 2 weeks while I waited for the cabinets to arrive and get installed.

I know childcare is costly, we have 3 little ones and it certainly eats a chunk of income.

He doesn't want to give the money back so my GC ends up keeping the materials and eating the 3500 dollar loss.

@Kevin Keith BeckI agree that many investors have an unhealthy approach to dealing with GC's.