If it's the foreclosure auction, you have to have cash at the time of bidding, in almost all circumstances (Depends on county/state rules).

We thought we'd have it done and rented in a year, but life circumstances (a new baby and a new demanding job) slowed us down considerably.

@Jared Kadry, the transaction is much cleaner for new acquisitions, but what you're describing is possible under certain circumstances. 

So I am new to Real Estate and always looking for unique ways to make money.A good friend of mine messaged me with a “special circumstance”.What would any of you do in this case?

If that isn't the case, I'd assume 20-25% down.Next, if your ARV is $285K and you have $10K of fix up, I'd back the $10K out of purchase price and likely another buffer to allow for other unforeseen items that may come up post closing during the fix up process. 

I have read every book I could get my hands on, gone over my plan dozens of time both by myself and with experienced investors changing it as circumstances change.More than anything else I have the 'Why?'

In what circumstances it would raise the red flag even though you do nothing wrong?

Not a good idea in any circumstance.

Have a discussion with your tax professional about "unforeseen circumstances" regarding the sale of the residence. 

Even if your circumstances change, you will have a lot of good options.