(Note the last name; she's my wife, but her company still had to earn the business by being the better management company.)

I have considered flipping and currently work as a realtor to earn money to buy houses, but I would caution you against going into a strategy that is not your end strategy.  

Being self employed, I have a lot of control over how much I earn in a year.

It could be renting out the extra bedroom to a friend, etc.If you can't yet qualify for a loan, and let's say you are renting a home/apartment from someone, and you had an extra bedroom, you could ask your landlord if it'd be OKAY to rent out the extra bedroom to someone, while you live there as well.But if you could get someone to help you get a loan to begin with, I think living in a duplex or a home and renting out the other sides or bedrooms, would be a GREAT way to get started.For now, dig into all the awesome resources on this side and LEARN as much as possible!

I wouldn’t ever pay extra for better cabinets or special color countertops.

If you want the money now don’t use the SDIRA -if you want tax free or tax deferred earnings use the SD-IRA.

Do I need to have an extra LLC to conduct REO Transaction?

If you're settling for average deals, so be it, if that's your business model, but if you put in the time, work hard, and don't settle for average, you can start to earn more per home average. 

I want to also do some renovations and make the downstairs basement extra room and turn it into a room by adding a wall and closet.

It may sound nice to pay a 5% management fee but the extra fees can add up to be more than the other company that charges 10% with no add-on fees.