Buyer of note thinks seller still carries the insuranceWe sold a loan once to someone and a few months after we sold it the buyer of the loan called us asking for a copy of our insurance.

I tried to get the owner of three of the houses to carry a short note but no dice.

However, if you're running your numbers then you'll want to make sure that you're including all the interested paid for the money borrowed from your HELOC as well as the carrying costs including utilities, insurance and property taxes.

An individual carrying back the sale of their home (owner occupied) won't be held to higher institutional standards, RE operators.investors may be being in the business. 

I'm carrying!!!

You will benefit from better rates and lower cost lumber now, so that will help make up for some of the added carry and perhaps the market conditions have even improved? 

Yet, you should never say never and any investment carries a certain degree of risk.

I think your numbers are a little high (but still very good) as you'll need to consider your carry costs during the 4 months.

I've also seen houses there in prime locations that have been for sales for years and didn't sell for one reason or another, so building a spec house would also carry it's own risk. 

double check your outlay of costs on arbitrage. you may not be paying to buy a property, but you will have to furnish it, carry insurance, and pay the owner their money too. and at the end of the day, the owner can stop your "business" and take it off the market or sell it at any time.