However, from tax perspective, it seems to me flipping houses under an llc or s corp pays more tax due to self-employment tax.

If you research his "employer" I bet he is the owner.  

I could write out some document employing them for free rent but not sure how that might work atm.Thoughts: Putting them on the loan may be silly because I have better credit I believe.

I have been in construction all my life and would like to make the job change from self-employed construction company to owning & renting property.Joe

I currently employ one (the only one I've ever hired), and not sure what I think of them.

That much is obvious, I know.There are hundreds of plans to choose from, unlike an employer who will only provided a few choices.Depending on circumstances, the plan you get may cost anywhere from a few hundred, to a thousand per month.

Maybe the current employment is a poisonous existence, maybe the newbie has an extreme entrepreneurial spirit, maybe the newbie has an excessively detailed plan and the capital to back him/her up for six months/a year.I agree with all of these.  

I have not invested in Colorado, but I do have something that may be helpful for you: if you're in the business of flipping homes, you may be better off flipping in an S corp rather than an LLC because you'll save some money in self-employment taxes.  

In addition to my real estate income I work at Sleepys (mattress store) which brings me to about $75,000 per year, but because my job is commission based I need to show 2 years of consistent employment in order for the banks to consider my income which leaves me in a tough spot for a loan.

Per seller, it's very easy to rent because there is a college 5 mins drive away and some other employers in the neighborhood.