5) If I did #4 above, could I then live in the house(s) & sell it 2 years later with no tax consequences (assuming the 250k/500k rule6) Who holds the monies to insure Unca Sam gets his taste?

But they left a bad taste in my mouth for exactly the reason you're bringing up.

After a month or two of the initial purchase, I am already talking with lenders that I already have built relationships with about my project to see who has a taste for it.  

Get a taste for flipping and being a landlord and decide if it is right for you.If you do become a landlord, screen like crazy.

Granite taste on a banquet budget?

The wife is an interior designer and is open to a house not finished if it means she can pick out finishes to her taste.

This practice opens the doors to abusive practices when the fee is set or obtained in excess of what the owner would be entitled to.This is why other professionals in RE, such as attorneys, title companies, closing agents, appraisers and Realtors have a bad taste for wholesalers in general. it's not just that they may be seen as facilitating transactions without a license, but doing so being woefully uneducated in real estate and setting fees in line with net listing practices in taking equity from owners. 

I explain that the roof alone is more than the kitchen renovation so they can come in and put their own kitchen in to their own tastes.  

Thinking of Airbnb, inquire about a local one, maybe even stay there to get a taste and see what you would do differently or the same.  

I used to live right across the street from one of his Wineries in the Napa Valley.. and would schedule the last tasting of the day..