I asked if there is a fixed rate offered, and was told that there is...but the rate is much higher.   

A lot of people use private money to buy / fix and then refi with a bank.

My attorney suggested to get the heater fixed before filing for UD even she didn’t pay within 3 days... 

More money is made in modifying and performing notes vs using notes to expand their fix and flip business.  

Let him move out, you fix the unit to your liking, and then rent it at market rate.Make it a business decision.

There was a $17K rebate on it and we went with a 10 year, guaranteed fixed price SREC contract. 

With 20% down you should absolutely be able to find a 30 year fixed rate....although, I don't know your financial/credit situation...but getting a 30 year fixed rate, especially early on, will help you qualify for more deals in the future. 

Comparing these terms to the best financing I've found through a bank ($320k loan, 5.5% fixed for 10 years then refinance, amortized over 25), with same purchase price and down payment, results in a lower monthly payment by $315/mo, plus my principal balance after 10 years of payments through bank financing would be $240,000, compared to the $180,000 balloon that the seller wants at year 10.

I was just saying in my post above that it's important that your accountant does taxes...PLUS be an advisor (which is where accountants bring the most value).To answer your question:I am assuming you are talking about a fix & flip, rather than a buy/hold.This will not go on Schedule D because you aren't selling an investment with capital gains/losses - you are selling a piece of inventory so there are no capital gains.

Our goal from here is to fix up the newest property and then take out a commercial loan for an apartment building as our lender said we could use equity from our personal property and from the newest rental as a down payment on an apartment.