He says I'm not misunderstanding the contract and in this case it's better to ask for a price reduction, but HERE'S the kicker he then tells me to CANCEL any appointments I have with contractors (he only knows of one I have) until we know if this is going to go through.

The common misunderstanding between an FHA loan and conventional loan with less than 20% down is FHA loans have a Mortgage Insurance Premium (MIP) whereas conventional loans have Private Mortgage Insurance (PMI).

The discrepancy may be down to differences in state law or just misunderstandings. 

Maybe I'm misunderstanding the situation but it sounds like you have something to offer other investors.

@Scott SmithYou're right, I think I have been misunderstanding how the structure works.

Is the suggestion that if I have one, I don't need LLCs, sorry if I am misunderstanding. 

Maybe I misunderstand, but I have always interpreted it as upon notice from the tenant, the landlord has to make a good faith and reasonable attempt to re-lease the property.

We have had a couple of minor misunderstandings despite the quote being in writing.

I think some commenters are misunderstanding your concern.

Hope this clears up any misunderstanding!