I only would have cash flowed maybe $100-150 since rents were lower than I thought they were in that area, I would have had maybe 15k still in it after my refi, some dude knocked on the door before I was even done rehabbing it, offered me 92% of full market value cash (pending the rehab being completed of course), and I said we have a deal sir and moved on down the line.

I sincerely want to build a duplex after purchasing a small lot in my stepmother's developing neighborhood, and house hack.

This means we definitely conduct formal background checks with credit scores and criminal histories but we also factor in their personality, their sincerity, their facebook account activity, and we go through references with a fine tooth comb.

This may sound silly and cumbersome as a sincere suggestion, but might it end the controversy to simply "reset" the original deal by temporarily deeding the house back to the seller and having it recorded, while holding a subsequent deed from them back to you, notarized and official, but with deferral on your recording of it?

I'm looking here for a sincere and helpful advice. 

I am now looking to buy a second (and possibly third) property, but have since realized that in order to make the property cash flow better, it would be better to get a loan on the property.

Round down to 5, since rates only come in 0.125% increments. 5 * 0.125% = 0.625% = as I suspected, approximately the entire difference between the two is due to LD covering ~$4k of your closing costs in the rate. 

I've noticed I usually fail the 1st time I try something new, so any guidance and advice is sincerely appreciated.

Most people if the family passed all other background checks and you can meet and talk with the family and they seem sincere, shouldn't be a problem but then again, I know friends that were stuck with headaches and I know friends that thought this person was going be a nightmare and was the nicest and most respectable tenant out there...

Sincerely, Aaron