Yea this is a long-term personal play more than a strict STR deal. 

Dumb question - but are these auctions online only, or in-person? 

This will allow you to remove the person and do the financing on your own.Home Equity Loan/Line of Credit: Since you're looking to access equity, a home equity loan or line of credit (HELOC) can be a good option.

If you make the person an LLC employee you can get around it, but partner does need to be careful. 

Gator most of the risk is on the person providing the earnest money.

I’m not a former IRS person.

I got a deal on labor as I know the contractor personally and helped out a bit with the project.

Not that it cant or wont, but unlikely.If OP applies for homestead on a new property, then I personally would not lie during the application about receiving the exemption on the existing property.

The drawback is you need to build trust and relationships upfront.Both have their place, but private money tends to offer more flexibility, while hard money is more structured and accessible if you lack personal connections.

Personally, I would hang on to the cash.