Whether you buy, rehab and resell or wholesale (as Mike indicated), you just need to know how to spot a good deal and jump on it FAST.

Other than increasing my return a bit higher than this 6-7%; is there a way or ways I can minimize my risk i.e. taking a higher position (1st), taking collateral, offering in draws in conjunction with the build, ensuring there is plenty of equity along the way, and ensuring that the builder has at least 20-25% skin in the investment with me?

Make sure that the house has 2 bathrooms, good size closets and a kitchen that can be upgraded at minimal cost.

I wouldn't mind taking a test, and actually, this wouldn't be a bad option for most people, as it would be a better indicator of whether they know what they are getting into, and whether they should be investing in anything risky at all.

Huds escrow program is for FHA loans that require minimal repairs.

If you do commercial loans, with 5 yr renewals you will never see more than a minimal principle reduction. 

Run it right, keep all proceeds in it's name with occasional, minimal, justifiable withdrawals or distributions...you should be ok.  

that's crap they did that to you. they probably aslo double the PMI on you (that's what happened to me when i did a HARP streamline for an investment property).To hit a home run refinance, you need 1. lower interest rate 2. knock some years off the loan 3. minimal amount of closing costs..Why not refi to a 20 year?

Some people would like more control over the deal so why I indicated other options.  

Find out the best indicators and, with patience, you'll locate a properly cash flowing deal that will make sense.