The lender, not denying any of this, has verbally agreed to a discounted pay off if arranged quickly. 

That way you are keeping your crews busy all the time (maintaining talented workers is the hardest thing in RE) and you can do multiple projects that are at different stages at the same time.  

Either way, I am at the stage where I am fully confident in my ability and willingness to step out and be successful on my own in this industry.

Or, you could pull the equity out on the home you own through refinancing and put that equity toward one or more rental properties.The world is your oyster at this stage.

What do you think about the possibility of doing it in stages - splitting it into 8 but building one or two with the possibility of finishing the build out down the road while figuring out how to actually fund the project.

My in-laws approached my wife about a business proposition in which they would finance majority of home purchases (down payments) and we would manage the properties. Now on the surface it seems like a pretty decent id...

I know there are potential pitfalls and lots to figure out about this plan, but I'm specifically curious about how this type of arrangement would affect the owner-occupied mortgage situation.

now focus on finding the next deal.There's more than $$$ to improve:1) how can I reduce my costs2) how can I do it in less time (holding costs,early start planning etc)3) how can I make it sell quicker (staging etc)so there, more things to think about besides felling bad for 5k.

I'd like to see one completed and analyzed to wrap my head around everything and make sure i'm not missing anything when we get to this stage of the process. 

It is at this stage that financially, the COOPs are at the most dangerous.