They have the cash or can arrange financing in an hour.

I don't have an agent I'm working with in the area yet so I don't even have a referral arrangement.

Obviously, this arrangement doesn't allow me sell the high points and benefits of seller financing, so my inquiries have consistently returned a flat "no".

In the wholesale arrangement, you become an equitable interest holder in the property, thus, you have every legal right to sell your contract, or re-sell the home.Wholesaling in NY or any other state for tht matter is not illegal, what becomes illegal is using some illegal technique to wholesale.

Other issues, you can get lucky, using rents, but tossing it in as a credit building arrangement can't be further from being applicable, you don't "establish" credit for a buyer, you can't even report it and the amount makes no credit impact but is an underwriting consideration for a future lender.

A deal fell through that I was working on because the person (a friend) arranging the investors, me and another gentleman, wanted to have equal equity with us and had no money to put up.

Say it was a 2 bed unit and a family of 4 wanted to move in with 1 boy and 1 girl child, you cannot say no based upon the kids having to share a room, again that is under the familial status umbrella and up to the parents how they will deal with the sleeping arrangements.

He doesn't have the cash to make this arrangement initially and he is planning to use his net income proceeds to purchase the additional equity.

What you seem to be considering is a short term purchase/financing arrangement (lease-option) for long term asset needs (buy-hold) which violates the first golden rule of financing assets, you need a long term financing arrangement to acquire for long term assets.Another point, with rates so low, they will be higher in 3-5 years.

This seems to be working out fairly well since the job provides some amount of steady income, but it's also a very flexible type of arrangement.