I want to make sure I do this correctly from a tax standpoint since all I'm making is a flat fee.

So for the first property which will cost over $1 mil to construct, there will be stacked loans, essentially $280K will come from loan assistance program,( the name is not correct but the same idea).

So after 5 months you:a. taken a LOC of $10k but repaid it with $8k of cash and $2k of the invested money.SO AT THAT STAGE: You are $8,000 out of pocket - Correct?

., for their clients.Many will say, "that's the investor's problem".They are correct because an investor should NOT rely anyone else to run their numbers.So, then what exactly makes them investor-friendly?

You are 100% correct in your assumption.

If my assumptions are correct - documented 4point issues  (electrical, HVAC, roofing, plumbing)  will need to be remediated in order to close. 

In a busier place, you might just be told to find a GC to "un-cluster' what you did.For me, when this happened, I had to go and hire a certified plumber, and electrician, and framer to come in and certify that all the work my handyman did was correct - and to fix the issues that weren't correct.  

What this implies to the typical RE investor is obtaining significant cash flow is a big challenge right now and relying on other RE profit sources (such as a value add and not doing a value subtract) may be a more certain path of generating returns.  

If I understand correctly; the seller would receive 80% ($40,000) directly from the mortgagee at closing and would enter into a personal agreement with me for the 20% down payment ($10,000) in which he would be reimbursed separately from my mortgage payments at a separately agreed upon rate and term?

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