So I am completely at a loss on how to properly calculate the profit/ loss.  

Performing: the borrower is paying (typically for 12+ months)Nonperforming: the borrower hasn't paid for several months/years (you need to make them restart paying or foreclose)Reperforming: the note was non performing but as a result of loss mitigation efforts the borrower restarts payingPpr sells reperforming notes where the borrower has restarted making payments for like 3-4 months.

@Chris PurcellMake it cash flow all night as well in order to compensate for the real loss in property value as explained by  @Russell Brazil  , should you have a zero appreciation property.

Rental Agent shall use its best efforts to ensure the operation of all amenities in the Property, such as internet access, satellite or cable TV access or fireplaces as applicable.Rental Agent shall not be held responsible for such items failure to work, but will make every effort to correct any issues as reported as quickly as possible.Guest acknowledges that use of amenities such as fireplaces, lake, dock, decks, and the like may be potentially dangerous and involve potential risks if improperly used, particularly with regard to children and such use is at the Guest’s own risk.Guest shall use the Property for residential purposes only and in a careful manner to prevent any damage or loss to the Property and keep the Property in clean and sanitary condition at all times.Guest and any additional permitted guests shall refrain from loud noise (especially after 10PM) and shall not disturb, annoy, endanger, or inconvenience neighbors, nor shall Guest use the Property for any immoral, offensive or unlawful purposes, nor violate any law, association rules or ordinance, nor commit waste or nuisance on or about the Property.DEFAULTIf Guest should fail to comply with the conditions and obligations of this Agreement, Guest shall surrender the Property, remove all Guest’s property and belongings and leave the Property in good order and free of damage.No refund of any portion of the Total Rental Fee shall be made and if any legal action is necessary, the prevailing party shall be entitled to reimbursement from the other party for all costs incurred.ASSIGNMENT OR SUBLEASEGuest shall not assign or sublease the Property or permit the use of any portion of the Property by other persons who are not family members or guests of the Guest and included within the number of and as permitted occupants under this Agreement.

So if he gets hard money lenders at 12%, which I think is high, how does he manage to make his payment to investors, would he not be short on a monthly basis, thus the whole project will be a loss?

If you overestimate value and/or understate repairs you will lose your profit and may end up with a loss.

Bad excuse, cut your losses and get another flooring professional.

That would be a change that will be opposed but it is a ridicules loss of government income. 

After closing and after the policy is bound, within the first month or two, the insurance company did a loss control inspection and came back with items they wanted addressed or changes to the policy based on what they found. 

Oh well, their loss if they cannot learn from people who offer information and have to insert themselves and their dark motives and problems into this thread.