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? 

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. 

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

So hard money loan in my name, down payment and carrying costs covered by her but we still need to meet to hash out the details.

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. 

Quote from @Eli Ling: also does FO letter mean F@#k off letter?

What is your view of "passive" income and are you okay with the higher risk it carries?

Quote from @Kar Sun: My tenant's lease is coming to a close and I am relieved she will be moving soon.She has been paying on time but has been extremely unpleasant and rude.While the money does not smell my mental sanity is more important than money in this case.She sent me a registered letter stating that she feels "unsafe because we have not done the fixes the way she wanted it".She requests to have her witness for a walkthrough.In my state a walkthrough is required but I am not about to grant it to her to bring any witnesses as that is not in my contract.If she feels unsafe she does not have t be present.I also do not treat a final walkthrough with a tenant as a final sign off.This walkthrough does not include a detailed inspection of the plumbing and the appliances that will be done after she departs.This is simply for the visible cosmetic issues and should take less than 1 hr.  

what did your letter say that got you 6 deals?