The flippers we personally work with in California have not run into this issue (as far as I'm aware).

(Interesting, because the best guess I’ve seen is that John maybe personally grossed no more than $10 million from this mentorship over a 8 - 9 year period of time).

I’m not a former IRS person.

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

I am still personally buying rentals but I am not expecting much in the way of cash flow at the moment.

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.

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

Personally, I would hang on to the cash.  

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.

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