I don't have much advice as now the profits are gone and it seems like the best thing to do is to get your money out the deal and move on.  

Either way, your father-in-law’s position is protected.The investment property should be held in either a land trust with an LLC as the beneficiary, or directly under an LLC.

It sounds like at the current moment a HELOC would be the way to go as it can help keep costs low by only paying interest on what I pull out rather than doing a refi and being locked in to a higher payment regardless whether or not I find a deal.

So far, the best deal I have been able to find is 5% down with no PMI (80% from Fannie and another 15% from a second lender).

Best of luck!

And how is wholesaling brokering given; Wholesalers are engaging in contract trading for a profit margin(arbitrage) and brokers are providing professional services, facilitating transactions for a commission while obligated to act in clients’ best interests?

Quote from @Nate Williams: I found the worst house on the best block in a local historic neighborhood.

They live their lives in such a way, or do business in such a way, that others want to follow their lead, hoping to get similar results.I have mentors on this website that may or may not know that they are my mentors.

He claims others want to make an offer, but unless it's a full cash buyer (which is rare in our small town), I doubt they’d be able to close faster than us.I’m getting the sense that he may not actually want to sell, and this whole process is just a way for him to tell his wife that no one could buy it.

Once you determine #2, identify the EASIEST and CHEAPEST ways you can exceed what the expectations are during your rehab.