This is an excellent location to learn many tricks of the trade as well as gain partners, mentors, and connections to help you to learn and earn within real estate. 

FINANCIAL CONTRIBUTIONS:1.1 Party 1 Responsibilities:Party 1 shall contribute to the partnership for the down payment, closing costs, and construction costs for renovations and additions.1.2 Party 2 Responsibilities:Party 2 shall independently pay the mortgage until both properties are rented, oversee construction and renovation, manage both rentals, and handle bookkeeping during construction.2.

Debt if used responsibly is a valuable tool but to say debt will always multiply returns is the wrong message to spread in these forums where there's a ton of readers who are inexperienced investors and will fall for the trap of following your flawed approach to originating debt.If you need additional help understanding how debt works in real estate, please send me a DM and I would be happy to help you out.

Keep in mind that any traditional lender will have rules and limits for how much the seller can finance in addition to their own loan, so unfortunately it's not possible to combine the two for 100% financing or anything close.John

Looking for some clarity on the capital gains.

Even the house is fully paid off, the 1% property tax + 1% maintenance offsets 2% annual gain.

My question is do I need to use all of the equity towards the down payment of the property, to avoid capital gains tax? 

If you don't get any additional feedback, you should be able to call the City of Phoenix Planning Dept and assess the overall process, timeline, fees, and feasibility fairly easily.

Experience is the only way to gain this credibility.Clearly, my experiences are different than yours, and the only thing you will be out by getting your license is some time and money.  

Exactly and all of that plays into the price you're willing to sell the additional frontage for to allow for the new lane.