The owner wants to minimize the capital gains tax he pays so we want to suggest to him to do a master lease to us for "x" amount of time, and we pay his lease fee and hold the rest of the money in this time we will secure a loan to buy using the money we make as part of the down payment.

Reaching out to the BP community for  recommendations of tax and legal professionals close to my area specializing in real estate investing. 

The other 'more legitimate' way forward could be to get it rezoned to R-3, replatte the property, put a new street in with proper sewer and water mains.

You can run the Osha 30 Hour Course on the background of your computer, obtain acceptable levels of insurance and as long as you don't owe the city of Philadelphia taxes, you can get a General Contractor license in Philadelphia.

I have heard that I should have an LLC for each home but it seems administratively burdensome to have 100 bank accounts and 100 different tax filings, credits cards, checkbooks, etc...

What tax benefits might you receive that could potentially offset some of your tax burden with such high income?

The house probably also has delinquent taxes etc on it as well.

Also, during those 2-3 years you may have to bear to obtain possession, the borrower will probably ignore court orders to pay insurance and property taxes, leaving you out of pocket for those costs.  

You make money and are expected to pay taxes. 

I know this is pretty obvious, but have you tried checking the Montgomery County property tax records or the property tax assessment records online for Silver Spring?