Why risk the construction company over a failed flip?

There are some properties with 10 bedrooms that really cash flow, but there are downsides and risks involved with having so many bedrooms in a single family dwelling.I am actually working with a client right now to find him 2 properties by McMaster.

It is subject to limitations as @Caleb Heimsoth mentions, but if it does get limited, the loss can be carried forward.

Consider what returns you can get from other very safe (paying off existing debt you carry) investments or riskier investments (eg: stock market index funds), or what you can get from a different property.  

The reason 10% sounds to good to be true, is because a cap rate that high is indicative of a high risk asset.

Plus, most stores prefer to carry 40 and 50 amp breakers; not so much the 45 amp ones.

From what I've gathered already is to always look for;-3 years experience-3 referrals minimum-proper licensing -contractor carries good insuranceAny other things to look for in the future?

I would caution you that before trying it again make, sure you understand the risk.

What are the risks?

Overlays are the extra rules that banks put on top of Fannie/Freddie loans to limit their risk.