This makes our overall profit look pretty decent, with a 12% return.

If a regarded entity owns it then the entity pays the tax and gives you a partnership or corporate return with the tax being paid.  

Will I pay them the 10% monthly on the 100k or at the end when I return the money?

Do you know if you are currently taking all the expenses you are eligible on your tax return? 

You will survive. good underwriter looking at your tax returns will see you own the debt and the asset.. probably gets bounced.. this is what HML did pre 08 all of our loans went to buy and hold folks and we did rate and term refi.. but we were a true third party lender .. its was a great gig while it lasted my average turn on my loans was 92 days.. and the buyers not only had no money in the deal they got refi proceeds usually 5 to 8k a house and they would do 4 and a time.. now they were suppose to take the refi proceeds and put them in their reserve account.. but alas the reserve account ended up having Jets skis in them instead maybe a new car.. or that trip they wanted to take.. etc etc.. anything but where it was suppose to go.. 

He is married to a younger woman and has two girls that are about 3 and 6.

You really want to focus in the early stages on the cash on cash return.

Flipping California properties 200-500 acquisition price points with normalized net returns of 15% has allowed us to capture between 30k-75K per project average to around 52.5K per project.

I would not be in the least bit concerned but if you are you should pull out all the equity from the properties.Invest it in a REIT or income fund and it should easily will double the return it is presently earning.  

I see becoming an Agent as a sacrifice of time, energy, and money but in return I get all of the opportunities that come with holding the license.