I don't see how the Seller gains anything here. 

If we built a spec house we could either sell when finished and take the tax hit on gains or 1031 exchange it, or live in it for two years (before or after construction) and qualify for the full capital gains exemption because we lived there for a few years before it was a rental.  

ROI is approximately 6 to 7 years, so any utility savings after that is a gain...I really don't care after 6++ years as I may not keep the apt, so it might be a value add when selling [also NOI would be better after smaller utility bill].

House hack a  4 plex, improve credit score to 700, triple my income from last yearProgress towards this goal:Working on increasing my income from my career in real estate and also doing some credit repair this will help me more so for the upcoming years and help gain some credibility with lenders.

You can still use similar techniques for quick gains on buy and holds, though.

In other words, you can see the slow down in growth before real estate prices flatten or drop.Coming out of a recession, look how job growth goes from it's worst (about 5% job loss in worst year) to 2% job loss the next year, 0% the following year, then 2% gains, then 4-5% gains, then starts lessening again to 3%, 2.5%, and tends to drift back down towards 0% again, before going negative..

I gained a ton of info as to where to get money to start up and the basic principles of flipping houses.

I am trying to go into this investment with the mindset that we are making passive income first, gaining equity second, and whatever we get appreciation wise is icing on the cake. 

This would mean you took 30 years to gain a big $425,000...minus closing costs, commissions, etc...  

With a small starting amount like that, you will gain a much higher return on the knowledge accumulated from researching the equities than you will from the actual dividend stream itself.