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. 

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.

Listing photos were terrible, tenant vetting was lackadaisical, checks were sent to wrong addresses, tennants weren't properly vetted, charges for "mulch" and landscaping were charged but never physically carried out.

(Calling any real estate lawyers to comment.)Assuming one could live with the litigation risk, I would propose three options for buyer prospects to tour listings: 1) A buyer’s agent from another brokerage could schedule a tour OpenDoor-style, but with no compensation offered from the listing agent or seller 2) If the buyer has no agent from another brokerage, a buyer’s agent from mine could accompany the prospect and open the door for a fee ($25-50) 3) if a prospect insists on touring alone, for scheduling reasons or any other, the prospect would have to show proof of funds/lender pre-approval and pass a background check (this last part could pose challenges) You're passionate about the idea, I can see, and I'm not saying none of that could or would work, but in my honest opinion you're looking for a nugget of gold in a sea of desert here.

Cash to invest (enough for deposits, skin in the game lenders want you to have, closing costs, carrying costs, and to kick off rehab work).2.) 

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

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. 

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? 

If it turns out well a good lender is worth their weight in gold.