Does this go federal since it crosses state lines with all the out of state investors?

Is there a law, state or federal, saying,at so many properties or income level, you must get a real estate license.

They must at least use the AFR ( applicable federal rate).

As this ripples though, it's impossible to imagine the Federal tax rebates won't diminish.Also, none of the utility companies are complaining about this.

If you wait until age 59 1/2 or older to take an i-kind distribution of the property, federal taxes will apply,and depending on your state of residence, state taxes may also apply; however the 10% early distribution penalty will not apply. 

At this point you are trying to jack up the price and have the government assume liability for the mortgage and "hide a fee" within the confines of it to someone who is not licensed to accept that fee.

I also get tired of having to explain that by "making a relationship" with you, I expose myself to litigation if I ever have to sue a borrower for a deficiency from a foreclosure and oh, let's not even mention the part about how I have to explain to my state and federal regulators, or my shareholders that I failed in my duties to maximize recovery and minimize risk of loss by selling directly to some invidivual investor instead of exposing the property to the open market....you keep digging.

Have you looked at government programs like Fannie Mae Homepath? 

Sometimes it can be better to have a BUFFER between the owner of a project and government officials.

The reason for the 20% down is because I'm financing through a government program called NFC.