For me, I am a little hesitant because I would be in a situation where I would be trying to secure traditional lending (which should be very feasible given credit scores & what $$ amount I am pre-approved up to from my banks), meaning that I assume I would be forced into using my first-time homebuyer loan incentives.

I think the borrower is better off trying a local bank or broker in that area.

The bank they are using with that offer is now saying my site prep bid came in way too high and not approving me (so far. still in process).

The workshop shows how SDIRA owners can earn double-digit returns by owning real estate as a bank. 

Personally, and what I would do for my clients, I would connect with a local community banker to discuss the property and see if their bank would entertain this type of financing (not all banks like doing this type of deal).

Credit Union, Brokers, Banks (all have different advantage & disadvantages). 

I also have $100,000 in the bank, and I'm trying to figure out what steps to take next.

And equally for the buyer, if you want to renovate and refinance or cash out, wouldn't you have to pay off the entire mortgage at that point and the bank would know it was always the buyer paying off and not the seller?

That's a technical banking and legal term.

That is the best option if you are truly trying to help a family member.you cannot get control of the mortgage, you can do sub2 but you are not in control, the bank could call it due if they see the property transfers title.The other way is for you to buy it from them at market rate, then rent it back to them at market rate.