The Rentals are generating passive income not subject to SE tax, the Flips will generate Ordinary income subject to SE tax. 

When he sees that, he'll start siphoning off from his ordinary paycheck to invest in your next collaborative venture which will make both of your lives better. 

If I decide later to start a construction business (actively building and selling new spec houses), assuming this is taxed as ordinary income with social security, etc and treating the homes as inventory - if you build a house, then sell it, then spend that money building a second one, but don't sell it until the next year, then sell it, then build another, can you effectively push off the taxes as you are rolling the sale proceeds into new inventory costs / construction costs? 

Security deposit can be used for damages on the property that are not ordinary.

Still learning and working out a way to attain financing since my employment situation is a little out of the ordinary, but otherwise have a bit of cash to put into a few investments.I've also been working on a spreadsheet the past few months, though I'm always tweaking it.

Is it out of the ordinary to ask to do a walk through with a contractor so that I can bring some concrete numbers to my buyers?

Not sure if a bankruptcy would change the parameters or not but that may be a better option for the seller. yes if the bank reports the debt as forgiven.. there is an IRS form though you can file with your tax's that says your broke.. then you don't own the tax's on the forgiven amount.. during the crisis IRS postponed this so no one got that treatment but that sunset and now short sales or debt forgiveness needs to be calculated …. the forgiven debt is tax as ordinary income so a 1 mil forgiveness could be a 300 to 400k tax bill..

Additionally, I'm not certain but I believe that every penny of withdrawal taken out of a (non-Roth) 401k/IRA during retirement is taxed at your ordinary rate, which is likely to be higher than tax preferred treatment of real estate.

As far as an s-corp, it is not usually a good idea to hold rentals in one, as there are issues if your strategy changes in the future.S-Corps may be beneficial if the income you are producing from real estate is ordinary income and subjected to self employment taxes (like flipping homes, wholesaling, property management).Be sure to talk with a CPA that knows your entire situation before making this decision.

There might be a bit more paperwork, but as long as you have two years of tax returns (just like you'll need with an ordinary W2 job...) you'll probably be able to find a conventional lender who'll be able to work with you.