Private  lenders, are non-professional lenders ( your uncle, colleague, uncle money bags down the street)   They're just ordinary  people who want in on the real estate action but don't have the time to find and manage deals.

If your intent is to fix and flip the net profit is taxed as ordinary income. 

I thought LLCs were generally treated as pass-through entities by IRS.The only tax advantage I can think of would be if the LLC was taxed as an S-Corp and some of the income was distributed to me from the S-Corp as dividends which are taxed at a much lower rate than ordinary income.

Gains from flipping are ordinary income.

Then at the time of distribution - account holder will be paying ordinary income tax.

One accountant told me as of the day the house was vacated ALL expenses incurred, whether ordinary monthly maintenance or actualy repairs/upgrades will ALL go into the basis to offset the gains in 2017 when I sell it3) I will be doing all the expenses and improvements this year 2016 and listing it Dec 1, no way it can sell and close in this tax year.  

@Kenneth Goldman ten months without a deal is not out of the ordinary.

Material participation or active participation comes into play when its time to net your rental loss ( passive loss) with your other ordinary income ( w-2) Generall rental loss cannot offset other ordinary income, but there are two exceptions:1) You can net rental loss with Ordinary income if you are RE pro. 

Keep in mind even if rentometer estimate is correct, $3700 is in the high end in CLT even for a 5 BR. It

Sharing equity through a promissory note is not typical or ordinary.