Should this be noted as red flag to get into this market?

Yes but the loan has to be approved first before getting the down payment paidThat's a big red flag to me. 

For example, Caliber Home Loans offers the 203k program and their own in-house version of it (I believe they just call it a Construction Loan) that essentially works the same way but there is much less red tape.

Most contractors don't like to do them because of all of the paperwork and red tape.

I just picked up a new $900 stainless LG dishwasher with a dent in the rear panel (that I already popped out) for $300 but my wife wouldn't let me get the NEW display model bright red front load Samsung washer they had out for $325.

Multifamily is definitely the way to go but you need to educate yourself on the space.Single family is a much slower way to scale and carries a lot of risk as one bad tenant or capital expense can wipe out the cashflow and put you in the red fast.Commercial and multifamily will typically require 30%-35% down depending on the lender and the property.

Problem I have is how do I get that money into the bank without raising red flags?

The Utah market is red hot for starting homes/rentals but your comments have built my confidence in the STR market too.  

Most of the people I saw said that it is better to continue the pitched roof with smaller pitch (see in red).

Or, I could say, have chosen to look at the sky and declare it is red, or describe the sun as cold.I suggest you read part C again, paying particular attention to what subparts 1, 2 and 3 are actually saying, not what you hope they are saying, and don't forget that you are not allowed to pick and choose which parts of the law you wish to follow, and that all parts work together.If it appears I am annoyed with you it is because I am.