Your choice seems based on what this contractor has to lose, ie.

I've looked at a bunch that seem good initially, but then a little digging reveals more problems.

His pivot towards new construction might seem surprising at first, but it aligns perfectly with his principles.

The straightforward response is to 1031 into something bigger.

I am intrigued by this only because it seems fairly reasonably priced for a duplex, much less a brand new one.

It seems impossible to not let them know your identity. 

I also found this on IRS.gov. it seems fairly clear you sir are wrong!  

While HELOCs always seem appealing, since you feel the untapped money is burning a hole in your pocket, consider the risks.You’ve never flipped a property Rob, and not all flips are successful.

Considering the potential for unexpected costs, especially with the unpermitted addition and the need for significant updates like roofing and windows, the profit margin seems tight.IDK, the significant dip into your savings for a project with many unknowns could strain your safety net.

It seems like it is so much easier to work with a company than to try and do it ourselves.