It sounds like you are essentially taking on all of the cost and liability of running a contracting company, only hiring people without actual skills.Honestly you need that consult with an attorney ASAP.  

But there is still something out there that i cant quite get my head around. apart from certain carrying costs, vacancies and management. most other expenses are fixed vs variable. so when trying to calc overhead based on rent revenue, seems like you can miss wildly. and i guess thats where having your own model for your own area, asset classes etc will solve this.but say for example you've got 2 structurally similar buildings within 25 mins of each other. say they are 4 unit buildings, one is in a high rent area the other in a "war zone" and both need a new roof. well that roof is going to cost you the same regardless of how much rent you are collecting as would any non-cosmetic repair, along with any another non-variable costs. 

I am looking trying to structure the deal where the owner is essentially the lender.

There is an interesting study that was just released by McKinsey that essentially states that leveraging has increased at exponential rates in almost every country since the Great Recession.  

I just became aware of a situation where a family friend and her mother have offered to short sale their home with no regard to loss of their initial $20K down payment and damage on their credit due to the fact that they're up in age (one is over 100 years old) and they see no other recourse.How can I advise them of a different strategy to resist the temptation to give away what is essentially a really nice home that needs minimal TLC in the Oviedo FL area?

You are essentially providing some motivation for the borrower to sign the DIL docs and leave the property in a timely manner and in good condition and send/leave you the keys. 

The team can essentially act as a collective group of mentors.

You need to start asking yourself, "Is what I am doing right now revenue generating?"

Thanks that is very encouraging I believe the marketplace will really take off with a few tweaks maybe an additional source of revenue.

Most importantly, the revenue, profit, and upside have to adequately compensate for that.