The easy way out is to pay a trusted contractor for their time to go through the house and do a materials and labor bid/estimate on your scope of work.Personally, I either do that or just ballpark the rehab myself.  

The IRS defines just two types of passive activity: trade or business activities in which you do not materially participate during the year; andrental activities, even if you materially participate in them, unless you are a real estate professional.It would be highly unusual for a person to meet the first definition: Own an SMLLC engaged in trade or business yet not materially participate in those activities.The second type of passive activity defined by the IRS, however, is often relevant.

What can we cut out or use different materials to bring the cost back to $45,000?

So between the online class material and the climer practice information was all I used.  

Obviously land purchase is easy, but considering we will be hands on with the majority of labor, I'm not sure how we would justify costs past materials to the bank.

I believe the key, though, for the state test (because it is very different), it was helpful to know the material well enough to understand situations practically, then using what you know, figure out the answer/solution.

He claims it was due to him closing the account because his truck was broken into and checks and other personal material was stolen.He claimed he was going to send a new check, but that hasn't happened, and he's stopped responding to me.What are my best options at this point to collect the earnest money that he owes me contractually?

Most of the homes we provided did need a lot of work & in some cases we also financed the rehab materials only.  

I will pay for flip materials with a credit card because I know I'll only pay interest for maybe 2 months and pay it off when I close on the property when I get the "big" check.

Under the accrual method, when you buy materials, you will decrease your "cash" account and increase your "inventory" account.