I am going into business with family, however it doesn't mean that issues won't arise.

This applies to financial equity arising from a sale contract.

Can anyone think of potential problems/liabilities/tax implications that could arise from doing this?

Too many headaches arise when people are unethical.  

The 3 main problems with not having it 'under contract' with the seller arise when 1) You do  a bunch of work only to have someone else buy the property and you get zilch 2) You do a bunch of work and the 'investor' buys it and gives you nothing.  3) You do a bunch of work and the investor passes or can't buy it after all.  

A rising market, which is what you appear to be describing, is one where prices are rising and as such comps become outdated due to the demand in the market.

I will track my progress for those who are interested and if any questions arise, I'm sure BP will be there to help me out! 

Number 2 is where some issues can arise because they post a sign in the yard about the review so that your neighbors can be informed and speak out if they want to.  

The court may also grant any other claim arising out of the contract.

Disclaimer: I dont know if the listing is actually still active, so this post is 90% because I am curious, should this situation ever arise again.