Yeah mate,Too much outside influences and logistical issues with new construction.It's much easier/less risky when you control as much of the process as possible and don't need approval from anyone for "this or that".New build works in other markets but why would anyone new build in 43612, 43613 or 43623 for example when they can buy dirt cheap and renovate for much much less than new build.Just my opinion and there are many ways to skin a cat when it comes to real estate investing 

Tax Adviser has a great read on the topic, linked below, fairly technical, but gives you an idea that it may not be as black and white.https://www.thetaxadviser.com/issues/2012/aug/clinic-story-0...

I post this because I do not see any issues with this type of property.

To people that are used to living in houses built in the 70's and later, not having a bathroom on the top floor may be a deal breaker, but if this is a popular part of town, particularly if it tends to feature older houses (1920-50's), then the people looking in that area will likely not mind as much.Now, if every property around you has multiple bathrooms on each floor, and yours is the outlier, then that could be an issue, and you will need to price rents accordingly, but overall, you can't please everyone, including your friends.

Should I include security deposits I've received and then forward to my owners in the 1099 I issue them? 

Most of the family and friends are willing to invest with us as we give them a steady return %...do you see any issues with that ?

ALL of these issues can happen locally as well for sure, but if you learn locally the lessons are generally not as expensive. 

Invisible issues hurt you the most.

I like there offer calculator and they have a mobile app.

The main issue is that rental rates on the new construction make it challenging to cash flow much, if any, in the first 3 years.