I’m at a stage where I’ve built a small portfolio and now I need partners/investors in order to continue my rate of growth. 

I understand fast solutions have slow problems.If I'm myself, I continue to lean into REI via BRRRs in growing areas of buying established but undervalue in very good areas to keep it a growing % of my portfolio.

This helped us strategically reposition and continue growing our portfolios.

Any ideas on forming a new LLC with him to build vs continuing to loan him funds and dealing with the bank perhaps not liking this?

I’ll continue to gauge the interest and make a decision.

Will they still continue to assess for the new value? 

In case of continue the deal I would request and appraisal and inspection but still, as you mention, not sure if it is a good deal.  

We will continue to observe the performance of this property and eventually will build a second house next to it.

It is good for me to continue to reflect on my definitions and risk tolerance. 

By securing favorable terms upfront, I aim to maximize my ROI when selling within a 3-5 year window.I believe that connecting with like-minded investors is key to continued growth and success in this industry.