If you are interested in being the lender for investors BP has a book Lend to Live - that talks about this process and how to do it.

I don't know about other builders, but I would charge an investor who doesn't have a design and doesn't know how to run a jobsite the exact same as I would a homeowner.

The main lesson I learned through this process was I attempted to turn the home into a full short term rental and was unsuccessful because I had not done proper research.

This allows you to focus on TLC/Rehab deals where you can renovate and profit on the ARV to again pull cash out and repat the REI purchase process.

Not a huge a mount of cash flow and since only 1 property, want to minimize the fees as much as possible but also setup a process that can grow with me.  

If her spouse didn't file returns she must do so on her own.Respectfully but importantly, it sounds as though you spent too much time in your tenant's life and are now looking to "take care of her" the way her spouse once did and in the process trigger a bunch of taxes and frustration for yourself - trying to sort out a tenant's circumstances.

I also suggested they resubmit an offer for the land only since it was the only component involving the investor and then recommended they could put down a small deposit so we can move forward separately with designing drafts. 

A phone call determined that the tenant was "in the process of moving" and planned to sleep in the house that night but would have his stuff all gone by the next day.

However the HOA is very high ~$500 and it scares me to think about possible vacancy & the whole process of renting a home out.

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