The leasing or rental of units in those two family homes in which the owner occupies one apartment of that home as his residence is not covered by this law unless: The homeseeker or renter is a recipient of public assistance or housing subsidy; or,The leasing or rental process utilized the services of a person or organization whose business includes engaging in residental real estate related transactions; or,The availability of such unit is made known by making, printing, publishing, or causing to be made printed or published any notice, statement, or advertisement with respect to the rental of such a unit that indicates any preference limitation, exclusion or discrimination based upon race, color, religion, sex, sexual orientation, national origin, ancestry, children, marital status, handicap, veteran status, or public assistance or housing subsidy recipiency.The following text is effective 07/01/93  

This will help us achieve our goals faster in the we can build both long term security and wealth and do more short term transactional work to help me transition from my day job down the road and become a developer.

So, my opinion (Not legal or financial advice) is, do whatever you need to do to put money in the bank so you can make this a cash transaction.

You make up the cost of rehabs by buying lower, you don't usually get to ask much higher (especially on capital expenditures like a roof)

I was hoping to find someone here on bigger pockets who is familiar with investing and could also help me with my first few transactions. 

Your payment will be lower which will help with DTI for other future property investments.

Also is there a method of extracting the equity from both properties in a single transaction?

You would be wise to find a decent agent who will broker the transaction for a reduced fee and represent you both, and split the cost.You're doing a real estate transaction in the most litigious and law-choked state of the union.

When asked what happens if some parts of the work come it at a lower cost, he said that would be his profit and if it's higher, it would be his risk.

If your going to buy a duplex in Memphis you better make sure you looking at something at a base minimum of $150k or better as anything lower will be in those bad areas that you won't want to stay in.