How much can/will this hurt me even if my processes are sound and I operate honestly with my sellers/buyers?

BP is a good starting point as there are plenty of folks on here that operate in the niche.

Maybe instead you offer them simple interest which is easier to budget.

Plain and simple, it's not their property and they should be asking for approval before they make any changes to the property. 

I noticed that the Capex reserve were included in the operating expenses while i read many times that it should not be included in the NOI, and therefore should not be counted toward the property price.

I have also owned and operated 2 successful businesses before that. 

Now we pay a bunch of fees to Nevada for renewal of the registered agent and  to keep it operational (over $500/year) but it doesnt have any impact on our ability to do business in Ohio. 

In order to be recognized as a rental activity with operational losses, you will need to rent it to your S-corporation as the fair market value.

I work as an Assistant Director of Operations for a Software company.

As far as first investment type, of you househack (meaning owner occupy a 2-4 unit) then go that route.If you’re not doing that I would start with a single family, just to keep it simple.