, gets an arrangement with the borrower and once the borrower starts paying on a regular basis (seems after 10 months), sells them back to investors... 

Plenty of time to dedicated to loan requests in processing, but many loan requests will never get to the processing stage.

At this stage you will have cap gains, but much less than earned income taxes in the alternate scenario...Thoughts? 

Detailed by contract however you make the arrangement.

Most here has stumble at some stage of their career, but have had many more hits than misses.  

You certainly should not make any kind of permanent arrangement at this stage.  

My real estate dream has always been to get passive income through rent houses so I was excited that I was actually at a stage in life where I could afford to buy one. 

Also that you won't be signing any contract releases if the inspection period expires without adequate inspection arrangements being made.2) If you're serious, bring your inspector with you3) Knock on the door.  

If you want to hold onto the deed itself, then you are looking for a similar arrangement called "contract for deed".  

At this stage, conventional lending should work just fine, especially if your tax returns show income for the current rentals.Things started getting a bit more difficult for us when going for the 5th loan...not impossible, but much more in terms of a 25% down payment and 6 months' "liquid reserves" that we had to have on hand.