When I got a approved an family emergency presented and I notified my Realtor that I was not able to move in, the contract stated that if I terminated the contract early I was responsible for a penalty up to 2 month of the lease amount, I negotiated down with the landlord to have the last month of penalty reduced and she agreed.

I know hundreds of real estate investors per every contractor able to handle a project.

These are typically C class buildings that need to handle some abuse.

Would we want to include her in the legal entity we create to handle this transaction or no - for estate planning/getting assets out of her name? 

Hoping to scale to about 60 by years end as I feel that's all I can handle on my own and keep up with sales too. 

However, my area (high cost-of-living) could make breaking even or positive cash flow difficult.The main question: is house hacking worth it or a "good deal" if cash flow from the rented units doesn't fully cover all expenses but you're significantly reducing living costs?

I would only use the formula for small, severely distressed, negative current NOI deals with big upside.  65% simply reduces my risk. 

“Reinvesting” your flip profits doesn’t reduce your tax liability in any way.

In Indy, taxes are 2% of assessed value, but homeowners can get an exemption to reduce it to 1%.

You have multiple incomes so in a way you are reducing your risks.