In the interim, by maintaining a proper Contractor/Owner relationship with appropriate contract and being listed as additional insured under the contractor's policy, you are better protected.  

I've since pulled a second permit and will soon be appraising right around $2m with an additional $330k invested for total equity of approximately $1.2m.

In addition with a 2nd refinance later on, you stretch the payments out again.

Typically, agency (Fannie/Freddie/FHA) funding does not allow for significant construction/improvement funds in addition to funds to buy a home.

Yes, I would use VRBO in addition to other platforms. 

For beginners with small a budget. Which lead sources work best.

Do I need additional policy for the first property? 

In your case, since you reduced the reported amount on the 1099-S to reflect the actual amount you received after the payment to the program, you might want to have the documentation from the county's request readily available.While it's not mandatory to submit the documentation with your tax return, having it on hand can be helpful in case of an audit or if the IRS requests additional information.

Additionally, I have been looking into section 8 investing around the area and does anyone know if manufactured homes qualify for section 8 housing?

I don't let money site in there.Also, Venmo only allows transfers to your bank of $3,000 at a time, but you can make as many $3,000 transfers as you want in succession.