But from the federal perspective this is fine.

That rate and term sounds fine to me, especially with DTI issues and closing in an LLC. 

When you compare rates, make sure to also compare the fine print around perils/coverage/replacement cost/values/etc.

We just don't quite know how to approach it and to determine what would be a fair price (one example was his price was about 62K for the architectural plans, permits, labor, materials, demo)I was trying to find other articles online about these kinds of ventures, but didn't turn up anything; so I figured some of you fine folks might have some insight into this.

Just leave your money in and you'll be fine.

Although I'm perfectly fine billing time and material if the customer prefers. 

I would think that listing it and waiting to show it until it's almost complete would be fine.  

It's fine to get a rough idea by using square foot guesstimates but before you make an offer I would suggest drawing the project as complete as possible and then quantifying everything so you can put a unit cost to it or send the drawings out to bid for the scopes you need help with.

The nerves are always high, but everything will be fine. 

Parties are fine, it's "wild" parties that are the problem.