The homeowner accumulated contiguous lots through this program after the neighboring vacant houses were demolished.

However, my goal is to accumulate as many properties as I can (as long as the numbers are good of course), and I know owner financing doesn't come by as easily or often, so I don't want to miss out on a good opportunity either. 

I can continue to buy and accumulate homes and it will work to my advantage (buying a home or two every year). 

The best investments have either cash flow or fast equity accumulation via shorter amortization (e.g. 15YR loans).Property appreciation should be considered as icing on the cake.

How many years does IRS go back in terms of checking the reported expenses and income, and the accumulated gain/loss over the years?  

I understand doing the work yourself because of capital.However if it is a few months before you can start the work, you will be accumulating carrying costs not to mention potential lost profits.  

It seems like you've already accumulated a sizable knowledge base - have you read the Ultimate Beginners Guide already, as well?

If you're accumulating 16k for 36k in cash in the deal, then you're doing quite well on the return.  

The house is currently on year 2 of a 15 year note and still cash flows nicely.Ultimately my goal is to accumulate as many rentals as I can. 

Accumulate atleast 2000 addresses of target properties.