@Jordan Gilberti This is one of the toughest areas of this industry to accurately capture...especially flippers taxed as ordinary income...and at the end of the year, how many investors really do a deep dive on their properties and confirm actual ROI...not many...this is tedious (and sometimes disappointing work).While flipping houses is not a viable or sustainable industry, it works for generating vacation cash...the most successful flippers aren't flipping houses any more, they are lending or teaching other people how to flip houses...but why?

Flipping and wholesaling for most are just jobs taxed as ordinary income but worse.

He pays ordinary income on the note interest and CaP gains on the principal he receives each year. 

Any advice regarding what I should look for or consider out of the ordinary would be much appreciated.

If you have sold few houses in the past and your initial intention with this house was to flip, you gain is ordinary gain, not capital.If you bought a property for rental, tried to rent it, and held for appreciation, it might be considered investment property and you might get capital gain treatment.

In RI it's attorneys who handle the escrow/closing, rather than title companies.Usually in Rhode Island, if you're using an agent and the standard RIAR (RI Association of Realtors) purchase and sale forms, you wouldn't engage an attorney until your offer is accepted (which in RI is the same as getting a signed P&S back), unless you or the seller is putting something out of the ordinary in the P&S (usually in the additional provisions on the last page but there are a few other places extra language can be added).In that case you might want to bring in your attorney to double check the language you or (especially) the seller are proposing, just so you understand what you'd be committing to.I'm not sure what your connection is to Rhode Island but since your profile says you're in Maryland there are probably some differences between the two states when it comes to real estate.

There is an 290 sq ft. unpermitted enclosed patio which isn't to code. 

Thus, it is important to look at such factors as the number of trades, the average holding period, the sources of income, the taxpayer's ongoing involvement in the activity, and the percentage of available trading days on which trading activity occurred (Holsinger).If you are a trader, you have the option to take home office deduction as an ordinary business expense.

From my limited research, it looks like the initial capital has to be from a capital gain and not from ordinary income/savings. 

Also, remember that these suspended losses can use against any other passive income, does not have to be related to this house.I know that you wanted to know if the suspended loss would eat you gain when you sold it, but it always better to plan in such a way to take the rental loss today and offset your ordinary income that is taxed at higher rate today than wanting to suspend the loss and later eat your capital gain from sale of the house.