As long as you are confident that you can afford the mortgage, I would get a multi-family with an FHA loan and rent out the extra room. this way, you can at least pay a reduced mortgage and build equity over time.

I don't think it's fair for him to add additional costs without my approval so I told him I would pay for the extra material and his labor but not the additional items he added which I think is completely fair. now he is saying he will send me to collections to collect the full amount am I in the wrong or is it justified? 

If not standard is it an extra service you provide?

I get what you are saying about the LLC costing extra money than it might be worth.So we do have an LLC established, but not on title to the property.

Some high income earners don't really want a bunch of extra cash today especially if the environment is not tax friendly.

I learned a lot of hard lessons during the rehab loan, finding contractors to estimate was difficult, getting the vendors paid by the bank was difficult, there are a lot of extra fees such as a required HUD consultant, inspections and draw fees.

I wouldn't at this point personally, extra complexity.  

For extra eye grabbing attention and a homey feel I might add a small cement bird bath outside one of the front windows behind the Japanese yew bush.

If you want to be extra safe, buy umbrella insurance and it will provide even more protection for very little cost.

On that big of a rehab, paying a couple of thousand $$ extra but having the money might work better for you.Now you dont have to be out of pocket and waiting for the next draw.