This was something pretty out of the ordinary for the attorneys (the bank’s and ours), and it took more than five months from accepted offer to closing.

Flipping a house generates ordinary income tax- so you won't be able to utilize that and get any tax advantages from buying a house in a QOZ. 

Do your homes have nice, established yards with features like patios, etc that you can brag on?

One last point: remember that the main underlying reasons for all this regulation --- at least on its face --- is to protect the tenants and ordinary consumers.

For example, who pays for fixing the front patio roof if the roof is a continuous roof for 6 adjoining row houses? 

If your intent right out of the gate is to develop and sell, the income wouldn't be short-term gain, it would be ordinary income with self-employment tax exposure.Holding for a year doesn't matter. 

Normally installment sale has three components1) Your basis that is not taxed 2) Capital gain ( not taxed as your home qualifies for sec 121 gain exclusion) 3) interest - taxed at ordinary rate.  

Small population makes comps with patios impossible.

@Angela Smith If you have not held the property for a year then it is short term capital gains which is taxed as earned income, or ordinary income.

We've agreed to a contract on the property but have the Inspection still upcoming and can back out (or ask for a reduced sale price) if we find anything out of the ordinary that would greatly increase our rehab budget.